In this article we discuss the 5 best cheap dividend stocks to buy according to Mario Gabelli. If you want to read our detailed analysis of Gabelli‘s history, and hedge fund performance, go directly to the 10 Best Cheap Dividend Stocks to Buy According to Mario Gabelli.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, advertising technology one of the fastest growing industries right now, so we are checking out stock pitches like this under-the-radar adtech stock that can deliver 10x gains. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind, let’s now take a look at the 5 best cheap dividend stocks to buy:
5. NortonLifeLock Inc. (NASDAQ: NLOK)
Number of Hedge Fund Holders: 32
Dividend Yield: 2.31%
NortonLifeLock Inc. (NASDAQ: NLOK) is an Arizona-based software company founded in 1982. It is ranked fifth on our list of 10 best cheap dividend stocks to buy according to Mario Gabelli. Norton stock has returned more than 41% to investors over the course of the past twelve months. GAMCO Investors owns 232,700 shares in the firm that are worth close to $5 million, representing 0.04% of their portfolio. GAMCO activity on Norton stock has increased by 178% over the past months.
In February, NortonLifeLock Inc. (NASDAQ: NLOK) declared a quarterly dividend of $0.125 per share, in line with previous. In earnings results for the first quarter, the company posted earnings per share of $0.40, beating market predictions by $0.10.
At the end of the first quarter of 2021, 32 hedge funds in the database of Insider Monkey held stakes worth $1.02 billion in NortonLifeLock Inc. (NASDAQ: NLOK), up from 29 in the preceding quarter worth $1 billion.
4. Park Aerospace Corp. (NYSE: PKE)
Number of Hedge Fund Holders: 8
Dividend Yield: 2.59%
Park Aerospace Corp. (NYSE: PKE) is a Melville-based company that makes and sells advanced composite materials. It was founded in 1954 and is placed fourth on our list of 10 best cheap dividend stocks to buy according to Mario Gabelli. PKE stock has offered investors returns exceeding 27% in the past year. GAMCO Investors has trimmed their stakes in the firm by 13% since December 2020 and now own 693,000 shares in the company worth over $9.1 million, representing 0.08% of their portfolio.
Park Aerospace Corp. (NYSE: PKE) pays a healthy and regular dividend to shareholders despite being moderately priced. In March, the firm declared a quarterly dividend of $0.10 per share, in line with previous.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Park Aerospace Corp. (NYSE: PKE) with 1.4 million shares worth more than $18 million.
In its Q1 2020 investor letter, Huffman Prairie Holdings, an asset management firm, highlighted a few stocks and Park Aerospace Corp. (NYSE: PKE) was one of them. Here is what the fund said:
“We purchased shares in Park Aerospace Corp. (NYSE:PKE) in the second half of 2019. PKE is a growing aerospace business that manufactures advanced composite materials used in jet engines, commercial aircraft, military aircraft, business jets, space vehicles, and other specialized aerospace applications. PKE is a high-quality company run by a talented and well-aligned management team. Customers sign long-term, sole-source contracts with PKE to buy its proprietary composite materials. There was a clear line of sight to healthy growth in the business as contracted customers ramped production.
Fast forward a few months, this thesis clearly didn’t age well. The problem being that about 55% of PKE’s revenue comes from customers building new commercial airplanes. Suffice it to say that airlines will not be purchasing many new planes anytime soon. While PKE’s primary program – the Airbus A320 – may be somewhat insulated, PKE will undoubtedly experience substantial revenue declines in this line of business.
I have had the great fortune to work for some of the smartest small-cap investors operating today. Learning from them helped shape Huffman Prairie and in particular one key aspect of our risk management discipline. We will not invest in companies that combine considerable operational and financial risk. It is typically the ones that combine excessive amounts of both that cannot make it to the other side unscathed.
The aerospace and airline industries are prone to cycles of low (i.e., after 9/11) and high (i.e., the 2010s) demand. As a manufacturer, PKE invests ahead of demand and carries fixed capacity regardless of demand. If demand falls, PKE is left paying for underutilized facilities, machinery, and tooling. The performance and cash flows from operations will suffer and perhaps turn sharply negative.
We were well aware of the operational risk factors above late last year. PKE was deemed to have operational risk but that did not make it unsuitable for investment. PKE counterbalanced its operational risk by carrying almost zero financial risk. At year-end 2019, PKE had no debt and $144 million of cash on its balance sheet – an extraordinary position for a company worth $334 million as a whole at the time. With a Fort Knox balance sheet, PKE mitigates the risk of permanent capital loss and ensures that it will make it to the other side. Instead of facing an existential risk similar to many of its peers, shareholders in PKE can instead look through the nearterm haze and value expected cash flows in the years ahead.
Shares of PKE were down -17.5% in 1Q202 . Reporting such performance is typically not the fodder of investor letters but is noteworthy in this case compared to an average loss of -58.6% for other small cap aerospace OEM suppliers3 . Risk management is an often-overlooked component of running a concentrated fund. We would much rather talk about the companies with 50% or 100% upside! But we remain mindful that the substantial losers matter too and are what often derails the powerful math of compounded returns.”
3. Hewlett Packard Enterprise Company (NYSE: HPE)
Number of Hedge Fund Holders: 27
Dividend Yield: 2.94%
Hewlett Packard Enterprise Company (NYSE: HPE) is a Houston-based firm with interests in a wide range of technological sectors. It was founded in 1939 and is placed third on our list of 10 best cheap dividend stocks to buy according to Mario Gabelli. HPE stock has offered investors returns exceeding 64% in the past twelve months. The hedge fund managed by Gabelli owns more than 1.4 million shares in Hewlett that are worth over $23 million, representing 0.2% of their portfolio. GAMCO stake in the company has been trimmed by 10% in the past months.
Hewlett Packard Enterprise Company (NYSE: HPE) is another dependable option for income investors looking for tips from Gabelli. On May 9, the firm declared a quarterly dividend of $0.12 per share, in line with previous.
At the end of the first quarter of 2021, 27 hedge funds in the database of Insider Monkey held stakes worth $1 billion in Hewlett Packard Enterprise Company (NYSE: HPE), down from 30 in the previous quarter worth $923 million.
2. Tredegar Corporation (NYSE: TG)
Number of Hedge Fund Holders: 9
Dividend Yield: 3.15%
Tredegar Corporation (NYSE: TG) is a Richmond-based company that makes plastic films and aluminum extrusions. It was founded in 1955 and is ranked second on our list of 10 best cheap dividend stocks to buy according to Mario Gabelli. Tredegar stock has returned more than 4% to investors in the past month. The hedge fund run by Gabelli owns more than 2.7 million shares in the company worth over $41 million, representing 0.36% of their portfolio. GAMCO activity on Tredegar stock has fallen by 5% since December 2020.
Tredegar Corporation (NYSE: TG) declared a quarterly dividend of $0.12 per share on May 6, in line with previous. The revenue of the company over the first quarter of 2021 was over $178 million, down 3.6% year-on-year.
Out of the hedge funds being tracked by Insider Monkey, Boston-based firm Arrowstreet Capital is a leading shareholder in Tredegar Corporation (NYSE: TG) with 304,805 shares worth more than $4.5 million.
1. The Gabelli Multimedia Trust Inc. (NYSE: GGT)
Number of Hedge Fund Holders: 2
Dividend Yield: 8.56%
The Gabelli Multimedia Trust Inc. (NYSE: GGT) is a New York-based equity mutual fund founded in 1994. It is ranked first on our list of 10 best cheap dividend stocks to buy according to Mario Gabelli. The fund concentrates on investments related to stocks, convertible securities, and preferred stock options in industries such as entertainment and telecommunications. GAMCO Investors owns 901,964 shares in the fund that are worth over $8.6 million, representing 0.07% of their investment portfolio.
The Gabelli Multimedia Trust Inc. (NYSE: GGT) is one of the best dividend options in the GAMCO portfolio, with a high dividend yield and an annual dividend of $0.88 per share. On March 16, the company declared a quarterly dividend of $0.22 per share, in line with previous.
Out of the hedge funds being tracked by Insider Monkey, Texas-based investment firm Brasada Capital Management is a leading shareholder in The Gabelli Multimedia Trust Inc. (NYSE: GGT) with 12,114 shares worth more than $116,000.
You can also take a peek at 10 Blue Chip Dividend Stocks Hedge Funds Are Buying and 14 Best European Dividend Stocks To Buy.
