In this article, we will discuss best dividend stocks under $25.
Dividend stocks have remained important for investors, standing the test of time regardless of the market conditions. Dividends have historically contributed approximately one-third of the market’s total return since 1960. Among dividend strategies, investors tend to favor those that emphasize dividend growth over high yield. One of the main reasons for this inclination is that as these companies show more tangible results, investors gain confidence from seeing improvements in free cash flow, earnings, and dividend growth during a recovery, compared to more speculative options. In addition, as interest rates decrease with Federal Reserve rate cuts in an economic recovery, yield-oriented investors shift their investments from cash to dividend-paying stocks.
According to analysts, due to volatile economic conditions since 2020 and ongoing market uncertainties affecting corporate earnings, high-yielding companies lacking strong financial stability and discipline may face challenges sustaining future dividend payouts. These companies could be vulnerable to potential dividend cuts or suspensions. On the other hand, dividend growth strategies have demonstrated their effectiveness in both rising and falling interest rate periods. The Dividend Aristocrats index, which tracks the performance of companies with at least 25 consecutive years of dividend growth, delivered a 14.26% return during the falling interest rates period between May 2005 and March 2024, while high dividend stocks underperformed with over 10% return, according to a report ProShares. Similarly, in the rising interest rates period between this timeframe, dividend growers returned 10.26%, with high dividend stocks returning 9.22%. To learn more about dividend growth stocks, readers should have a look at Dividend Zombies and Kings with Longest Dividend Payouts.
Dividend growth strategies offer potential solutions to the challenges faced by high dividend-paying stocks in a rising-rate environment in two main ways. By prioritizing dividend increases over high yields, dividend growth stocks are less influenced by the value factor, which typically affects high dividend payers. This resilience allows dividend growth stocks to perform better in growth-oriented markets.
Given investors’ penchant for dividend-paying companies, businesses worldwide are consistently rewarding shareholders with dividends. According to Janus Henderson, dividends rose by 5% in 2023 to $1.66 trillion, marking the third consecutive year of record highs following a brief dip in payouts during the pandemic in 2020. The fund manager expects total dividends to reach a new peak of $1.72 trillion, reflecting a 3.9% increase on a headline basis. The payments indicate that balance sheets remain strong, despite a global economic downturn and increased costs associated with servicing debt. It also underscores the advantages for the banking sector of higher interest rates. Nearly half of last year’s dividend growth came from banks, which rewarded shareholders after experiencing a significant increase in profits from lending activities.
Image by Sergei Tokmakov Terms.Law from Pixabay
Our Methodology:
For this list, we used a stock screener to find dividend stocks trading below $25 as of June 21. From the initial list, we selected companies with dividend yields above 2% and a history of regular dividend payments, indicating sustainable dividends. Finally, we narrowed it down to 12 stocks that had the highest number of hedge fund investors, as tracked by Insider Monkey in Q1 2024. Hedge funds aren’t dividend investors; they invest in stocks for capital gains. Essentially, our list presents the best dividend stocks under $25 that have the potential to deliver large capital gains. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
12. Hooker Furnishings Corporation (NASDAQ:HOFT)
Number of Hedge Fund Holders: 6
Share Price as of June 21: $13.46
Hooker Furnishings Corporation (NASDAQ:HOFT) is a leading home furnishing company, based in Virginia, US. The company designs, manufactures, imports, and markets a wide range of residential furniture products. The furniture market is very competitive, with many companies ranging from large corporations to smaller niche brands. This fragmentation limits market share growth and creates pricing pressure due to intense competition.
Hooker Furnishings Corporation (NASDAQ:HOFT) is struggling due to ongoing low demand for home furnishings, a problem impacting much of the industry. This was evident in its Q1 2024 earnings. The company reported losses on various fronts during the quarter, however, it believes that its current strategies in operations, marketing, and merchandising, are transformative. Challenging times like these offer a chance to reinvent parts of its business. In its Home Meridian segment, the company reported a 6.4% YoY growth in incoming orders, with SLH orders more than tripling. In addition, the quarter-end backlog was 22% higher than the same period last year and 37% higher than the fiscal year end in January 2024.
On June 4, Hooker Furnishings Corporation (NASDAQ:HOFT) declared a quarterly dividend of $0.23 per share, which was consistent with its previous dividend. The company has been growing its dividends for eight consecutive years, which makes HOFT one of the best dividend stocks on our list. In the most recent quarter, it returned $2.5 million to shareholders through dividends. The stock has an impressive dividend yield of 6.81%, as of June 21.
Since the start of 2024, Hooker Furnishings Corporation (NASDAQ:HOFT) has fallen by over 48% and its 12-month returns came in at nearly -28%, underperforming the broader market significantly. The stock achieved its all-time in December 2017, following the acquisition of Shenandoah Furniture, an upscale domestic upholstery manufacturer. On December 6, 2017, the stock closed at around $50 per share. During this period, there was also a significant amount of insider buying activity involving the stock.
At the end of Q1 2024, 6 hedge funds tracked by Insider Monkey reported having stakes in Hooker Furnishings Corporation (NASDAQ:HOFT), down from 8 in the previous quarter. These stakes are valued at over $47 million. With nearly 1.3 million shares, Pzena Investment Management was the company’s leading stakeholder in Q1.
11. Midland States Bancorp, Inc. (NASDAQ:MSBI)
Number of Hedge Fund Holders: 6
Share Price as of June 21: $21.5
Midland States Bancorp, Inc. (NASDAQ:MSBI) is an Illinois-based bank holding company that offers a wide range of banking services and products to its consumers. In the first quarter of 2024, the company announced the growth of its wealth management business which played a significant role in boosting its non-interest income. The company also mentioned continued investments in banking and wealth management talent, as well as technology, aiming to strengthen its operations and improve its capacity to generate long-term value for shareholders.
In the first quarter of 2024, Midland States Bancorp, Inc. (NASDAQ:MSBI) posted revenue of $77.1 million, which not only showed a 1.08% YoY growth but also beat analysts’ expectations by $2.20 million. The company ended the quarter with over $167 million available in cash and cash equivalents, up from $135 million in the prior-year period. In addition, it has benefitted a lot from the growth in its loans and deposits, especially after the pandemic. In the most recent quarter, the company’s deposits grew by $14.5 million compared to the previous quarter. This growth was mainly driven by increases in noninterest-bearing demand and brokered time deposits, though it was somewhat offset by seasonal withdrawals of servicing and public fund deposits.
For dividend investors, Midland States Bancorp, Inc. (NASDAQ:MSBI) has proven its worth over the years. The company has been growing its dividends for 24 consecutive years and offers a quarterly dividend of $0.31 per share. Its dividends are safe because of a low payout ratio of 39.4%. The stock supports a dividend yield of 5.79%, as of June 21. It is among the best dividend stocks under $25.
As of the close of Q1 2024, 6 hedge funds tracked by Insider Monkey owned stakes in Midland States Bancorp, Inc. (NASDAQ:MSBI), compared with 7 in the previous quarter. These stakes have a collective value of more than $5.7 million.
10. Matthews International Corporation (NASDAQ:MATW)
Number of Hedge Fund Holders: 13
Share Price as of June 21: $24.8
Matthews International Corporation (NASDAQ:MATW) is an American diversified company that operates in a wide range of industries, including industrial technologies, brand solutions, and memorialization. On April 24, the company declared a quarterly dividend of $0.24 per share, which was consistent with its previous dividend. In 2023, the company achieved its 30th consecutive year of dividend growth, which makes MATW one of the best dividend stocks on our list. As of June 21, the stock has a dividend yield of 3.21%.
Matthews International Corporation’s (NASDAQ:MATW) Memorialization business has outperformed internal expectations in the most recent quarter. The segment remained robustly positioned, supported by a solid, reliable foundation of cemetery memorial and casket sales, along with an expanding range of cremation-related products and services. In addition, it has maintained strong performance post-COVID, with current sales and adjusted EBITDA significantly exceeding pre-COVID levels. In the first quarter of 2024, the Memorialization segment came in at $222.1 million, down slightly from $222.8 million in the prior year period.
Matthews International Corporation (NASDAQ:MATW) has a total debt of over $911 million and its debt-to-equity ratio of 1.78 is a little higher. However, the company decreased its outstanding debt by $19.6 million and reduced its net debt by $27.2 million in the most recent quarter. According to the company’s current cash flow forecasts, it expects to further lower its outstanding debt and leverage ratio by the end of this fiscal year.
Matthews International Corporation (NASDAQ:MATW) was a part of 13 hedge fund portfolios at the end of Q1 2024, compared with 16 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a total value of over $87.5 million. Among these hedge funds, Millennium Management remained bullish on the stock as the hedge fund increased its stake in the company by 127% during the quarter.
9. SpartanNash Company (NASDAQ:SPTN)
Number of Hedge Fund Holders: 14
Share Price as of June 21: $18.56
SpartanNash Company (NASDAQ:SPTN) is next on our list of the best dividend stocks under $25. The Michigan-based grocery store company specializes in food distribution and operates across various segments of the food industry. The company’s first-quarter earnings remained relatively stable, however, its Retail and Wholesale segments reported declines in volume. Its Wholesale segment reported revenue of over $2 billion and its Retail segment generated $792.2 million. The numbers are great and the company expects to see profitability in both these segments by the end of the year. In the first quarter, it continued to demonstrate its ability to perform well despite challenging market conditions and is on track to achieve the $125 to $150 million in gross benefit outlined in its strategic plan by the end of 2024, which is a year ahead of the original schedule.
SpartanNash Company (NASDAQ:SPTN) has previously noted that it is undergoing a transformative change. Although its net margins initially fell, significant efforts were made to improve the situation. This progress is evident in its quarterly sales of over $2.8 billion, growth in positive net earnings, and a stable EBITDA. The company was able to expand its adjusted EBITDA margin during the quarter because of continuous investments in supply chain and merchandising transformations. The adjusted EBITDA stood at $74.9 million.
In addition to reporting strong earnings, SpartanNash Company (NASDAQ:SPTN) is also a reliable stock for income investors. The company has raised its payouts every year since 2011. In the first quarter of 2024, the company’s operating cash flow came in at $36.5 million. During the quarter, it returned over $8 million to shareholders through dividends, which makes SPTN one of the best dividend stocks on our list. The company currently offers a quarterly dividend of $0.2175 per share and has a dividend yield of 4.65%, as of June 21.
According to Insider Monkey’s database of Q1 2024, 14 hedge funds held stakes in SpartanNash Company (NASDAQ:SPTN), compared with 15 in the previous quarter. These stakes are collectively valued at over $40.2 million. Among these hedge funds, D E Shaw was the company’s leading stakeholder in Q1.
8. Atlantica Sustainable Infrastructure plc (NASDAQ:AY)
Number of Hedge Fund Holders: 16
Share Price as of June 21: $21.9
Atlantica Sustainable Infrastructure plc (NASDAQ:AY) is a UK-based company that specializes in acquiring renewable energy assets. Private equity firm Energy Capital Partners announced that it will acquire the company for $2.56 billion in cash. This transaction will provide Atlantica’s largest shareholder with funds to reduce its debt. Algonquin Power & Utilities, which owns over 42% of Atlantica shares, announced its support for the acquisition. This deal values Algonquin’s stake at around $1.08 billion. Algonquin plans to use the proceeds to reduce its debt and strengthen its balance sheet, aiding its strategic shift toward becoming a pure-play regulated utility. Since the start of 2024, the stock is up by over 3%.
Atlantica Sustainable Infrastructure plc (NASDAQ:AY) reported growth on multiple fronts in the first quarter of 2024. The company generated roughly $243 million in revenues, up from $242.5 million during the same period last year. Its operating cash flow of $65.6 million also showed a 57.3% YoY growth. The company continued to advance its growth strategy by leveraging its own development capabilities and supplementing them with strategic acquisitions. On March 22, the company completed its acquisition of a 100% equity stake in two operational wind assets in Scotland, UK, with a combined capacity of 32 MW. The investments totaled about $66 million and the assets currently have no project debt. These are Atlantica’s first operational assets in the UK, and the expected returns will be boosted by utilizing its existing net operating loss forward in the UK over the next few years. Since the acquisition, the stock has gained significantly by over 20%.
Atlantica Sustainable Infrastructure plc (NASDAQ:AY), one of the best dividend stocks on our list, currently offers a quarterly dividend of $0.445 per share. The company has been growing its dividends consistently for the past seven years. The stock offers an impressive dividend yield of 8.12%, as of June 21.
At the end of March 2024, 16 hedge funds in Insider Monkey’s database invested in Atlantica Sustainable Infrastructure plc (NASDAQ:AY), compared with 18 a quarter earlier. These stakes have a total value of more than $104.3 million.
7. The Wendy’s Company (NASDAQ:WEN)
Number of Hedge Fund Holders: 22
Share Price as of June 21: $16.4
The Wendy’s Company (NASDAQ:WEN) is an Ohio-based fast food restaurant company that is mainly known for its square hamburgers. The company has benefitted a lot from its customer-centric approach that supports its ability to drive shareholder value for the long term. It currently offers a quarterly dividend of $0.25 per share and has a dividend yield of 6%, as of June 21. It returned over $53 million to shareholders through dividends in the first quarter of 2024.
The Wendy’s Company (NASDAQ:WEN) achieved global same-restaurant sales growth, increasing by 120 basis points over two years compared to the previous quarter. This growth was partly fueled by high-single-digit YoY sales growth in the US sales growth in the US breakfast sales and a nearly 17% contribution from global digital sales. This strong performance led to a 60 basis point improvement in the margin of the US company-operated restaurants compared to the previous year, highlighting the success of these profitable initiatives. Breakfast has always been a big part of the company’s growth strategy. It has increased investments in its breakfast advertising in the first quarter of 2024.
The Wendy’s Company (NASDAQ:WEN) plans to expand quickly and increase its global presence. The company and its franchisees employ thousands of people across more than 7,000 restaurants globally, with the goal of becoming the world’s most successful and beloved restaurant brand. The company plans to increase its number of restaurants to as many as 9,000 by the end of 2025. We think that it has the potential to accelerate its growth by expanding its smaller restaurant base and increasing its share of the breakfast menu as the company is currently putting a lot of money into its breakfast segment.
As of the end of Q1 2024, 22 hedge funds tracked by Insider Monkey held stakes in The Wendy’s Company (NASDAQ:WEN), down slightly from 23 in the preceding quarter. These stakes are collectively valued at over $844.3 million. With nearly 4 million shares, AQR Capital Management was one of the company’s leading stakeholders in Q1.
6. Flowers Foods, Inc. (NYSE:FLO)
Number of Hedge Fund Holders: 27
Share Price as of June 21: $22.5
Flowers Foods, Inc. (NYSE:FLO) is a Georgia-based company that specializes in producing and marketing bakery products. On May 23, the company declared a 4.3% hike in its quarterly dividend to $0.24 per share. This marked the company’s 22nd consecutive year of dividend growth, which makes it one of the best dividend stocks on our list. The stock’s dividend yield on June 21 came in at 4.21%.
Flowers Foods, Inc. (NYSE:FLO) reported strong earnings in the first quarter of 2024. Its strong performance highlights the success of its portfolio strategy and investment in marketing and innovation. Despite difficult market conditions, its brands demonstrated resilience, gaining market share and outperforming the fresh packaged bread category. Particularly important was the growth in quarterly branded retail volumes, marking the first increase since 2020. The company reported a 3.5% YoY increase in its branded retail sales to $1.015 billion. Efforts to enhance profitability in away-from-home and private label segments are also yielding positive results, notably boosting margins in these areas of business. The company was able to grow its business over the years due to the strength of its leading brands, investments in innovation, positive pricing actions, and improved margins in key segments. Its revenue has jumped from $4.38 billion in 2020 to $5.03 billion in 2023. The company’s revenue for Q1 2024 came in at $1.58 billion, which also showed a 3% growth from the same period last year.
The good news for income investors is that Flowers Foods, Inc. (NYSE:FLO)’s cash flow is ample enough to support its dividend payments. In the most recent quarter, the company generated $105.1 million in operating cash flow, showing an increase of $47.2 million from the prior-year period. During the quarter, it returned $51.1 million to shareholders through dividends, up from $49.1 million paid in the same period last year.
For FY24, Flowers Foods, Inc. (NYSE:FLO) is maintaining its outlook, which includes expected volume improvements while recognizing the ongoing economic uncertainty and its potential effects on consumer behavior and the environment. The company expects to benefit from expanded savings initiatives and new business acquisitions.
Insider Monkey’s database of Q1 2024 indicated that 27 hedge funds owned stakes in Flowers Foods, Inc. (NYSE:FLO), up from 26 in the previous quarter. These stakes have a total value of over $285 million. Ken Griffin’s Citadel Investment Group remained bullish on the stock during the quarter, boosting its stake in the company by over 4,000%.
5. UGI Corporation (NYSE:UGI)
Number of Hedge Fund Holders: 29
Share Price as of June 21: $22.6
UGI Corporation (NYSE:UGI) ranks fifth on our list of the best dividend stocks under $25. The natural gas and electric utility company mainly specializes in delivering safe, reliable, and affordable energy to its consumers. During the strategic review post quarterly earnings, the company evaluated various options for creating value, such as selling, spinning off, or forming a joint venture for AmeriGas, its LPG business. After a thorough discussion, the board concluded that the company should concentrate on restructuring and operational enhancement plans for AmeriGas. This plan involves a strong emphasis on customer retention, increasing free cash flow, effective cost management, and disciplined capital allocation.
The propane market in Europe has been declining due to an oversupply of propane and reduced demand from the heating industry. UGI Corporation (NYSE:UGI) operates an LPG distribution business in 17 European countries through its subsidiaries and affiliates. Due to headwinds in the propane business in Europe, prices have dropped nearly 20% and are lower than they were two years ago, which we think is expected to benefit the company in FY24. The company’s AmeriGas propane revenue came in at $795 million, down slightly from $867 million in the prior-year period.
In fiscal Q2 2024, UGI Corporation (NYSE:UGI) natural gas division posted its highest-ever second-quarter earnings, marking a 32% growth from the same period last year. The company also made significant strides in cost control to boost operational efficiency. These results demonstrate the resilience of its portfolio in delivering long-term value to shareholders. For FY24, the company anticipates meeting its adjusted EPS guidance, projecting earnings between $2.70 and $3.00 per share.
UGI Corporation (NYSE:UGI) is one of the best dividend stocks on our list as the company has never missed a dividend in 140 consecutive years. In addition, the company has been growing its dividends consistently for the past 37 years. It currently offers a quarterly dividend of $0.375 per share and has a dividend yield of 6.50%, as of June 21.
The number of hedge funds tracked by Insider Monkey owning stakes in UGI Corporation (NYSE:UGI) stood at 29 in Q1 2024, down from 33 in the previous quarter. These stakes have a consolidated value of nearly $180 million. Among these hedge funds, First Eagle Investment Management was the company’s leading stakeholder in Q1.
4. Energy Transfer LP (NYSE:ET)
Number of Hedge Fund Holders: 32
Share Price as of June 21: $15.7
Energy Transfer LP (NYSE:ET) is a Texas-based company that is engaged in the transportation, storage, and distribution of natural gas, natural gas liquids, crude oil, and refined products. It is one of the best dividend stocks on our list as the company has raised its payouts for ten consecutive years. It currently offers a quarterly dividend of $0.3175 per share and has a dividend yield of 7.98%, as of June 21. The company’s future dividends are safe because of its strong cash position. In the most recent quarter, its Distributable Cash Flow (DCF) came in at $2.36 billion, growing from $2.01 billion in the prior year period.
Energy Transfer LP (NYSE:ET) has capitalized on acquisitions to gain significant momentum, setting the stage for an anticipated approximately 10% earnings growth this year. Recently, it announced plans to acquire WTG Midstream Holdings from affiliates of Diamondback Energy (FANG), Stonepeak, and the Davis Estate for around $3.25 billion. This acquisition is aimed at enhancing the company’s access to growing volumes of natural gas liquids and natural gas, particularly benefiting its operations in the Permian Basin and downstream sectors. In addition, the company successfully completed two major deals last year, further strengthening its strategic position in the market.
New growth projects and acquisitions have had a substantial impact on the volumes across Energy Transfer LP (NYSE:ET)’s assets. In the first quarter of 2024, the company posted a 44% increase in crude oil transportation volumes and a 10% rise in crude oil terminal volumes. Nearly all segments of the company reported growth during the quarter. Adjusted EBITDA reached nearly 4$ billion, marking a more than 13% increase compared to the same period last year. For FY24, the company expects to generate between $15 billion and $15.3 billion in adjusted EBITDA.
According to Insider Monkey’s database of Q1 2024, 32 hedge funds owned stakes in Energy Transfer LP (NYSE:ET), compared with 34 in the previous quarter. These stakes have a total value of nearly $930 million. With over 17.8 million shares, Abrams Capital Management was the company’s leading stakeholder in Q1.
3. Kinder Morgan, Inc. (NYSE:KMI)
Number of Hedge Fund Holders: 43
Share Price as of June 21: $19.6
Kinder Morgan, Inc. (NYSE:KMI) ranks third on our list of the best dividend stocks under $25. It is one of the largest energy infrastructure companies in North America, which owns and operates oil and gas pipelines and terminals. In June, Wells Fargo upgraded the stock to Overweight with a $22 price target, expecting growth in the company’s storage and pipeline segments. The firm highlighted the company’s favorable positioning to capitalize on multiple expansion opportunities. This was also seen in the company’s recent earnings report. It indicated an expected rise in demand for natural gas, specifically in electric generation. This increase will be driven by expanding operations in artificial intelligence, cryptocurrency mining, and data centers. The company views this growing demand as a significant contributor to its future growth prospects.
Kinder Morgan, Inc. (NYSE:KMI) is a solid bet for dividend investors, offering a steady stream of income to them. The company continues to meet its cash flow targets and objectives as planned. In the first quarter of 2024, the company generated over $1.2 billion in operating cash flow and its free cash flow was $570 million. Its dividend growth streak spans over seven years, which makes KMI one of the best dividend stocks on our list. The company’s quarterly dividend comes in at $0.2875 per share for a dividend yield of 5.72%, as of June 21.
Kinder Morgan, Inc. (NYSE:KMI) also reported a 7% year-over-year increase in its adjusted EBITDA. The company closed the quarter with a net Debt-to-Adjusted EBITDA ratio of 4.1 times, demonstrating its capability to handle debt obligations effectively. With a current debt-to-equity ratio of 1.01, the company expects to reduce its net Debt-to-Adjusted EBITDA ratio to 3.9 times by the end of 2024. Looking ahead, it forecasts an 8% year-over-year growth in adjusted EBITDA to reach $8.16 billion for FY24. Despite these positive metrics, the stock is trading at a forward P/E multiple of 15.58, which appears somewhat conservative considering its earnings growth and full-year outlook.
Of the 920 hedge funds tracked by Insider Monkey at the end of Q1 2024, 43 hedge funds owned stakes in Kinder Morgan, Inc. (NYSE:KMI), up from 42 in the previous quarter. These stakes are collectively valued at more than 41.1 billion. Among these hedge funds, FPR Partners was the company’s leading stakeholder in Q1.
2. KeyCorp (NYSE:KEY)
Number of Hedge Fund Holders: 46
Share Price as of June 21: $13.5
KeyCorp (NYSE:KEY) is an American retail banking company that offers a wide range of retail and commercial banking services to its consumers. In the first quarter of 2024, the company’s net interest income (NII) fell by over 20% compared to the last year and 4.5% from the previous quarter. This decline is due to the company’s past decisions regarding balance sheet management. While management expects NII to be lower for the entire year, they believe the second half to be much stronger than the first. This improvement will mainly come from the increased benefits of short-duration swaps and maturing Treasuries that can be repriced.
That said, overall fees grew by 6% from the previous quarter and YoY, mainly driven by KeyCorp (NYSE:KEY)’s record-breaking first-quarter investment banking fees. Analysts expect investment banking revenue to reach $600 million to $650 million for the year, with $170 million coming from this quarter alone. The company continues to excel in targeting its investments and growth opportunities and is on track to maintain stable expenses for the third consecutive year by the end of 2024.
Diamond Hill Capital also presented a positive stance on KeyCorp (NYSE:KEY)’s growth in the coming quarters in its Q1 2024 investor letter. Here is what the firm has to say:
“Portfolio activity has remained modest as valuations have risen, and it is increasingly challenging to find high-quality companies trading at interesting valuations. However, we did identify two new investments in Q1: Sysco Corporation and KeyCorp (NYSE:KEY).
Retail and commercial bank KeyCorp is a high-quality financial institution that we believe is trading at a discounted valuation. Over the next several years, we expect KeyCorp will generate improved returns and tangible book value growth as net interest margins expand and Treasurys on its balance sheet mature. We also anticipate positive loan growth following a period of balance sheet optimization and improvements among its unrealized losses as the company’s securities portfolio increases in value.”
KeyCorp (NYSE:KEY), one of the best dividend stocks on our list, has been paying regular dividends to shareholders since 1985. The company currently pays a quarterly dividend of $0.205 per share and supports a dividend yield of 5.89%, as of June 21.
At the end of Q1 2024, 46 hedge funds in Insider Monkey’s database owned stakes in KeyCorp (NYSE:KEY), down from 49 in the previous quarter. These stakes have a total value of more than $745 million.
1. Barrick Gold Corporation (NYSE:GOLD)
Number of Hedge Fund Holders: 51
Share Price as of June 21: $16.6
Barrick Gold Corporation (NYSE:GOLD) tops our list of the best dividend stocks under $25. It is one of the largest gold mining companies in the world, headquartered in Canada. The gold prices in the US have been fluctuating over the past month or so as investors await key US inflation data, which could provide new insights into the timing of potential interest rate cuts by the Fed. However, according to analysts, gold prices are expected to rise further, primarily driven by geopolitical tensions and high interest rates, which create a favorable environment for gold mining companies. This is beneficial for companies like Barrick Gold Corporation (NYSE:GOLD), which excel under such conditions.
What makes Barrick Gold Corporation (NYSE:GOLD) stand out from other precious metals companies is its emphasis on Tier One mining assets. These mines consistently produce low-cost gold and copper, ensuring profitability even when the prices are low. The company is capable of identifying new Tier One assets and recognizing the potential for existing assets to achieve Tier One status. The strong cash flow from the company’s Tier One mines allows the company to offers an appealing base dividend, supplemented by a quarterly performance dividend that varies based on its cash reserves.
On May 1, Barrick Gold Corporation (NYSE:GOLD) declared a quarterly dividend of $0.10 per share, which was in line with its previous dividend. Earlier this year, the company also announced a $1 billion share repurchase program. As of June 21, the stock has a dividend yield of 2.39%.
Ariel Investments mentioned Barrick Gold Corporation (NYSE:GOLD) in its Q1 2024 investor letter. Here is what the firm said:
“Lastly, gold mining company, Barrick Gold Corporation (NYSE:GOLD) fell in the period. Although GOLD delivered in-line earnings results, as higher prices offset lower gold and copper volumes as well as increased costs, investors were disappointed with management’s outlook for full year 2024. GOLD guided to flat production year-over-year driven by lower-than-expected output due to a delayed permit at the Nevada Gold Mines and mechanical issues at Pueblo Viejo. Management remains laser focused on upgrading its mining operations and broadly improving efficiencies amid today’s rising prices for precious metals. The company also continues to prioritize capital returns to shareholders via dividends and a recently announced share repurchase program.”
Barrick Gold Corp (NYSE:GOLD) remained popular among elite funds at the end of Q1 2024, with hedge fund positions growing to 51, from 43 in the previous quarter, as per Insider Monkey’s database. The collective value of these stakes is roughly $630 million.
While we acknowledge the potential of GOLD as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued dividend stock that is more promising than GOLD but that trades at less than 7 times its earnings and yields nearly 10%, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
