In this article, we discuss 5 best cheap DRIP stocks to buy now. If you want to read our detailed analysis of DRIP investment and the performance of DRIP stocks in the past, go directly to read 10 Best Cheap DRIP Stocks to Buy Now.
5. Kilroy Realty Corporation (NYSE:KRC)
Share Price as of September 19: $48.51
Dividend Yield as of September 19: 4.42%
Kilroy Realty Corporation (NYSE:KRC) is a California-based real estate investment trust, with over 14 million square feet in its portfolio spanning five distinct regions. The company has been raising its dividends for seven consecutive years. It currently pays a quarterly dividend of $0.54 per share, with a dividend yield of 4.42%, as of September 19.
In Q2 2022, Kilroy Realty Corporation (NYSE:KRC) reported an FFO of $1.17 and revenue of $271 million, beating estimates by $0.06 and $11.1 million, respectively. Its net income stood at $47.1 million, up 31% from the same period last year. The company ended the quarter with $120 million in cash and cash equivalents and $1.1 billion in the unsecured revolving credit facility.
In July, Mizuho maintained its Buy rating on Kilroy Realty Corporation (NYSE:KRC) with a $60 price target, highlighting the company’s position as an office REIT due to its high-quality portfolio.
At the end of Q2 2022, 23 hedge funds tracked by Insider Monkey owned investments in Kilroy Realty Corporation (NYSE:KRC), up from 15 in the previous quarter. These stakes hold a consolidated value of over $318 million. Oaktree Capital Management owned the largest stake in the company in Q2.
4. Donaldson Company, Inc. (NYSE:DCI)
Share Price as of September 19: $51.78
Dividend Yield as of September 19: 1.76%
Donaldson Company, Inc. (NYSE:DCI) is a Minnesota-based filtration company that specializes in the production and marketing of air filters. The company’s products are used in a wide variety of markets. In September, Baird appreciated the company’s high aftermarket content and margin expansion and maintained its Outperform rating on the stock.
In fiscal Q4 2022, Donaldson Company, Inc. (NYSE:DCI) reported an operating cash flow of roughly $109 million, up from $64 million in the previous quarter. The company’s free cash flow grew to $80.6 million, from $40.8 million in the preceding quarter. The company returned $28 million to shareholders through dividends, which shows its strong FCF generation. In addition to this, it also purchased $17 million worth of its shares during the quarter.
On July 29, Donaldson Company, Inc. (NYSE:DCI) declared a quarterly dividend of $0.23 per share, consistent with its previous dividend. The company has paid dividends every quarter for the past 66 years and has raised its payouts consistently for the past 26 years. As of September 19, the company’s shares yield at 1.76%.
At the end of Q2 2022, Donaldson Company, Inc. (NYSE:DCI) was a part of 21 hedge fund portfolios, according to Insider Monkey’s data. These hedge funds hold a collective stake worth $202 million in the company.
3. A. O. Smith Corporation (NYSE:AOS)
Share Price as of September 19: $51.98
Dividend Yield as of September 19: 2.13%
A. O. Smith Corporation (NYSE:AOS) provides water heating and water treatment solutions for both commercial and residential customers. The company is a strong dividend player as it has raised its dividends at a CAGR of 17% in the last five years. It also holds a 28-year track record of consistent dividend growth. The company pays a quarterly dividend of $0.28 per share and has a yield of 2.13%, as of September 19.
In Q2 2022, A. O. Smith Corporation (NYSE:AOS) reported revenue of nearly $969 million, which showed a 12.3% growth from the same period last year. Its net earnings for the quarter also jumped 7% to $126.2 million. In the first six months of the year, the company’s cash provided by operations stood at $54.4 million and its free cash flow came in at $23.7 million.
Following the company’s strong earnings and its net income growth, Citigroup raised its price target on A. O. Smith Corporation (NYSE:AOS) in July to $65 and maintained a Neutral rating on the shares.
At the end of Q2 2022, Impax Asset Management owned roughly $215 million shares in A. O. Smith Corporation (NYSE:AOS), becoming the company’s largest stakeholder. In addition to this, 27 hedge funds owned stakes in the company in Q2, down from 38 in the previous quarter. These stakes hold a combined value of over $387 million.
LRT Capital Management mentioned A. O. Smith Corporation (NYSE:AOS) in its Q2 2022 investor letter. Here is what the firm has to say:
“A.O. Smith is the largest US manufacturer of residential and commercial water heaters, boilers and water treatment products. The company generates close to $3 billion in annual sales. The majority of the company’s business (73%) is done in North America, with the balance coming from China and India. Approximately 80% of demand is replacing existing heaters and 20% is tied to new construction. The company continues to benefit from a shift towards higher efficiency, but more expensive, tankless heaters.
A.O. Smith generates returns on invested capital in the high teens. The company uses its earnings to consistently grow its dividends and share repurchases. Over the past three years the company’s performance has been hurt by its exposure to China as its business there suffered due to the US-China trade war and poor execution. We believe the China business is back on track and the all-important US business is doing better than ever as housing demand heats up in the US. The company beat earnings estimates over the past several quarters and is currently enjoying very good performance as the hot U.S housing market continues to be strong.19 A.O. Smith also recently increased its share repurchase authorization.”
2. California Water Service Group (NYSE:CWT)
Share Price as of September 19: $57.6
Dividend Yield as of September 19: 1.72%
Up next on our list of the best cheap DRIP stocks to buy now is California Water Service Group (NYSE:CWT), which is a California-based public utility company that provides drinking water and wastewater services.
Though California Water Service Group (NYSE:CWT) missed Street estimates on various fronts in Q2 2022, the company’s cash position remained strong. It ended the first six months of the year with $61.7 million in cash and cash equivalents and $3.78 billion in total assets. Its operating cash flow for the quarter came in at $35.7 million, compared with $37.6 million during the same period last year. The company expects to achieve its dividend payout ratio of 60%.
California Water Service Group (NYSE:CWT) holds one of the strongest dividend histories in the market. The company has been making consecutive dividend payments for the past 76 years and has raised its payout for 54 consecutive years. Currently, it offers a quarterly dividend of $0.25 per share and has a yield of 1.72%, as recorded on September 19.
At the end of June 2022, 12 hedge funds tracked by Insider Monkey owned stakes in California Water Service Group (NYSE:CWT), worth $108.7 million. In comparison, 19 hedge funds owned positions in the company in the previous quarter, with stakes valued at $143.5 million.
1. Aflac Incorporated (NYSE:AFL)
Share Price as of September 19: $59.77
Dividend Yield as of September 19: 2.65%
Aflac Incorporated (NYSE:AFL) is an American insurance company that provides supplemental insurance in the country. In Q2 2022, the company reported $121.4 billion in cash and total investments while its total assets amounted to $135.6 billion. Its cash position also remained strong during the quarter, as it generated $510 million in free cash flow. The company’s revenue stood at $5.4 billion in Q2.
On August 1, Aflac Incorporated (NYSE:AFL) declared a quarterly dividend of $0.40 per share, consistent with its previous dividend. The company has been raising its payouts consistently for the past 39 years. The stock’s dividend yield came in at 2.65% on September 19.
In July, JPMorgan raised its price target on Aflac Incorporated (NYSE:AFL) to $62 with a Neutral rating on the shares, presenting a positive stance on the life insurance sector as the ill effects of the pandemic began to subside.
At the end of Q2 2022, 32 hedge funds tracked by Insider Monkey had over $340.6 million invested in the company. In the previous quarter, 32 hedge funds owned $377.6 million worth of stakes in the company.
You can also take a look at 10 Dividend Stocks to Buy According to Billionaire Carl Icahn’s Icahn Capital LP and 10 Best Dividend Stocks with Over 8% Yield You Can Buy in September
