In this article, we will take a look at some of the best cheap quarterly dividend stocks to invest in.
Growth stocks are typically seen as companies with the potential to outperform the market in the future, even if they are currently unprofitable or trading at high valuations. While they offer the possibility of substantial returns, they also come with significant risks. In contrast, value stocks tend to perform well when the broader economy is expanding. These are well-established companies with consistent profits, many of which pay dividends. Investors are drawn to them because they are often perceived as undervalued relative to their true worth. Sectors like banking, utilities, and healthcare fall into this category. Historically, value stocks have outpaced growth stocks for much of the market’s history, but that trend has reversed over the past decade.
Over the past five years, the growth stocks in the Vanguard Fund have surged approximately 111%, with much of the increase occurring after the fourth quarter of 2022. This momentum was largely driven by major tech firms introducing artificial intelligence products and services, which accelerated earnings growth and lifted valuations. Meanwhile, value stocks have struggled to keep pace. Since late 2022, the value stocks in the Vanguard Fund have lagged behind its growth-focused counterpart and have gained only 48% over the past five years. In theory, this gap suggests value stocks could eventually rebound. Many of these companies continue to generate profits and return a portion to shareholders, so at some point, buyers may step in, pushing their performance closer to historical norms.
By the end of 2024, the value fund was trading at around 16 times its projected earnings for the year, significantly lower than the growth fund, which was valued at approximately 27 times earnings. This represents a roughly 40% discount, compared to the average 30% gap over the past decade, according to Barron’s analysis of FactSet data. This valuation gap makes value stocks look more appealing. If these companies deliver earnings in line with or above analysts’ expectations, they could demonstrate to the market that they are worth more than their current prices suggest, potentially leading to strong stock performance.
Also read: 15 Best Monthly Dividend Stocks To Buy Right Now
As noted earlier, value stocks are often associated with dividend payments. These stocks typically offer higher dividend yields and stronger fundamental ratios compared to growth stocks. When it comes to dividend investing, dividend growth plays a crucial role. The Dividend Aristocrats Index serves as a key benchmark for dividend-focused strategies, tracking companies that have increased their payouts for at least 25 consecutive years.
A report by S&P Dow Jones Indices highlighted that investment strategies focused on income generation tend to display value-oriented characteristics. Stocks with high dividend yields and lower valuations frequently attract investor interest. However, the report also pointed out that the Dividend Aristocrats Index blends both growth and value traits rather than leaning heavily toward one style. A comprehensive analysis of the index from 1999 to 2022 revealed that, on average, 59.04% of its holdings were value stocks, while 40.94% were classified as growth stocks. Given this, we will take a look at some of the best cheap quarterly dividend stocks to invest in.
Image by Steve Buissinne from Pixabay
Our Methodology:
For this list, we scanned through Insider Monkey’s database of 900 hedge funds as of Q3 2024 and selected dividend companies with strong dividend histories and yields of at least 1%, as of January 30. From that list, we picked dividend stocks with forward P/E ratios below 16, as of January 30. The low price-to-earnings ratio shows that they are traded below their intrinsic value. The stocks are ranked in descending order of their P/E multiples. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for Q3 2024.
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).
7. Lockheed Martin Corporation (NYSE:LMT)
Forward P/E Ratio: 16.05
Lockheed Martin Corporation (NYSE:LMT) is a Texas-based defense and aerospace manufacturing company that specializes in advanced technology systems, services, and products. The company has attracted investor interest, as defense contractors are generally viewed as dependable investment options. This stability largely comes from their strong ties to the US government, which provides a consistent stream of contracts. In addition, defense budgets tend to remain resilient even during economic downturns.
Growing geopolitical tensions across the globe are further driving defense spending, as nations focus on replenishing equipment used in conflicts and addressing evolving security threats. Among Lockheed Martin Corporation (NYSE:LMT)’s various divisions, its missiles and fire control segment stands out as the fastest-growing and most profitable, making it a key driver of future expansion. In the past 12 months, the stock has surged by over 5.2%.
Lockheed Martin Corporation (NYSE:LMT) reported mixed earnings in the fourth quarter of 2024. The company’s revenue for the quarter came in at $18.6 billion, which fell by 1.3% from the same period last year. However, in 2024, the company allocated more than $3 billion toward enhancing national security through research and development, as well as capital investments aimed at supporting its customers’ missions. These efforts focused on driving innovation and modernizing operations with cutting-edge digital and manufacturing technologies. Its strong and stable performance also allowed it to return over 100% of its free cash flow to shareholders in 2024.
Lockheed Martin Corporation (NYSE:LMT) also demonstrated strong cash generation in FY24. The company’s operating cash flow came in at $7 billion and its free cash flow the year amounted to $5.3 billion. In addition, it returned $6.8 billion to shareholders through dividends and share repurchases in FY24. The company offers a quarterly dividend of $3.30 per share and has a dividend yield of 2.91%, as of January 30. It has been growing its dividends for 22 consecutive years. With a forward P/E ratio of 16.05, LMT is one of the best cheap quarterly dividend stocks to invest in.
At the end of Q3 2024, 58 hedge funds tracked by Insider Monkey held stakes in Lockheed Martin Corporation (NYSE:LMT), up from 56 in the previous quarter. The consolidated value of these stakes is nearly $2.4 billion. Among these hedge funds, Two Sigma Advisors was the company’s leading stakeholder in Q3.
6. QUALCOMM Incorporated (NASDAQ:QCOM)
Forward P/E Ratio: 15.02
QUALCOMM Incorporated (NASDAQ:QCOM) is an American semiconductor company that provides a wide range of wireless technology services. While recent AI developments from DeepSeek have introduced some uncertainty to the market, the outlook for the year remains unclear. However, trends in handset demand and the expansion of AI within the industry are independent factors. Qualcomm has integrated AI into its latest technologies, including IoT and automotive applications. In the IoT sector, AI enhances data analysis directly on devices, improving efficiency for users. Meanwhile, in the automotive segment, AI plays a crucial role in enabling autonomous driving technology. The stock has surged by nearly 18% in the past 12 months.
In fiscal Q4 2024, QUALCOMM Incorporated (NASDAQ:QCOM) reported solid financial performance, with revenue rising 18% year-over-year to $10.24 billion. Net income saw a 33% increase from the same period in the previous year, reaching $3.5 billion. In addition, the company achieved annual earnings per share growth of more than 30% for the fiscal year. The stock has a forward P/E ratio of 15.02, which makes it one of the best cheap quarterly dividend stocks.
QUALCOMM Incorporated (NASDAQ:QCOM) is not only recognized for its innovations and portfolio expansion but also for its strong dividend policy. The company maintains ample cash reserves to support its dividend payments, finishing the quarter with $8 billion in cash and cash equivalents. It generated $12.2 billion in operating cash flow, an increase from $11.3 billion in the previous year. Demonstrating its commitment to shareholder returns, the company paid out $2.2 billion in dividends. The company has been rewarding shareholders with growing dividends for the past 20 years. It currently pays a quarterly dividend of $0.85 per share and has a dividend yield of 1.98%, as of January 30.
As of the close of Q3 2024, 74 hedge funds tracked by Insider Monkey held stakes in QUALCOMM Incorporated (NASDAQ:QCOM), down from 100 in the previous quarter. The collective value of these stakes is more than $3.23 billion. With over 1.8 million shares, Tiger Global Management LLC was one of the company’s leading stakeholders in Q3.
5. JPMorgan Chase & Co. (NYSE:JPM)
Forward P/E Ratio: 14.49
JPMorgan Chase & Co. (NYSE:JPM) ranks fifth on our list of the best cheap quarterly dividend stocks to buy now. The American investment bank and financial services company offers commercial banking, financial transaction processing, and asset management. The company has found significant success by focusing on investment banking and wealth management. In Q4 2024, investment banking fees jumped 49% compared to the previous year, driven by high client engagement. At the same time, the Asset & Wealth Management division saw a 25% increase in net income, reaching $1.5 billion, thanks to record client inflows that raised assets under management.
JPMorgan Chase & Co. (NYSE:JPM) had an excellent performance in 2024, reaching a record annual profit of $58.5 billion, a rise of 18% compared to the previous year. This growth was mainly fueled by the bank’s dealmakers and traders taking advantage of a market recovery in the fourth quarter. However, its net interest income (NII) dropped by 3% year-over-year to $23.5 billion in Q4 2024, marking the first decline since 2021.
JPMorgan Chase & Co. (NYSE:JPM) has outperformed the market by a wide gap in the past 12 months, delivering a 52.7% return to shareholders. The company is recognized as one of the leading dividend stocks, having reliably paid dividends to its shareholders since 1972. Reflecting its dedication to returning value to investors, the company paid out $3.5 billion in dividends in the most recent quarter. Its quarterly dividend comes in at $1.25 per share and has a dividend yield of 1.86%, as of January 30.
Insider Monkey’s database of Q3 2024 showed that 105 hedge funds held stakes in JPMorgan Chase & Co. (NYSE:JPM), compared with 111 in the previous quarter. The total value of these stakes is over $8.6 billion.
4. The Goldman Sachs Group, Inc. (NYSE:GS)
Forward P/E Ratio: 13.74
The Goldman Sachs Group, Inc. (NYSE:GS) is a New York-based multinational investment banking company that offers a wide range of financial services to its consumers. In the fourth quarter of 2024, the company reported revenue of $13.87 billion, reflecting a 23% increase compared to the same period last year. For the full year, the company’s assets under supervision rose by 12%, reaching a record $3.14 trillion. In addition, its book value per common share increased by 7.4%, reaching $336.77. The company also ended the year with a robust cash position, holding $182 billion in cash and cash equivalents, up from $155 billion the previous quarter.
A significant portion of The Goldman Sachs Group, Inc. (NYSE:GS)’s operations is its asset and wealth management division, which oversees trillions of dollars in assets and contributes significantly to its revenue. Investors are focused on expanding this segment, as its stable revenue stream supports higher market valuations. The firm is also shifting to a more capital-efficient approach by cutting back on equity and debt investments. This strategy enhances growth potential, improves stability, and increases the company’s reliance on income from fees. In the past 12 months, the stock has surged by nearly 68%.
The Goldman Sachs Group, Inc. (NYSE:GS) has consistently paid its shareholders dividends since 1999. In FY24, the company returned $3.8 billion to shareholders in the form of dividends. On January 15, it announced a quarterly dividend of $3.00 per share, maintaining the same amount as its previous dividend. The stock’s dividend yield on January 30 came in at 1.85%.
Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 72 funds owned stakes in The Goldman Sachs Group, Inc. (NYSE:GS), up from 68 in the previous quarter. These stakes are collectively valued at over $5.6 billion. Among these hedge funds, Fisher Asset Management was the company’s leading stakeholder in Q3.
3. Amgen Inc. (NASDAQ:AMGN)
Forward P/E Ratio: 13.53
Amgen Inc. (NASDAQ:AMGN) is an American multinational biopharmaceutical company, headquartered in California. According to analysts, the company’s business is strong, supported by a solid portfolio of leading drugs for conditions like heart disease, osteoporosis, asthma, and rare diseases. The company’s new drug candidate, MariTide, aimed at obesity, also shows considerable promise. However, the most significant growth potential for AMGN lies in its innovative oncology portfolio, especially its BITE platform, which is expected to lead to several new treatments in the coming years. Notably, drugs like Imdeltra, targeting small cell lung cancer, and Fortitude, focused on gastric cancer, are expected to hit the market in 2025/2026, presenting significant growth opportunities.
Despite these developments, Amgen Inc. (NASDAQ:AMGN)’s stock is currently undervalued, mainly because the market is heavily focused on MariTide, leading to considerable volatility in its stock price. The stock has a forward P/E multiple of 13.53x, which makes it one of the best cheap quarterly dividend stocks.
In addition to its product pipeline, Amgen Inc. (NASDAQ:AMGN) delivered strong financial results, with revenue rising 23% year-over-year to $8.5 billion in the third quarter, partly due to an acquisition. Excluding this, its organic sales still grew by a solid 8% year-over-year. The company experienced double-digit sales growth across ten of its products, including $1.2 billion from rare disease treatments, boosted by several promising early-stage medications. The company also reported $3.3 billion in free cash flow for the quarter, up from $2.5 billion in Q3 2023. This increase was primarily driven by strong business performance and favorable timing in working capital, although it was somewhat offset by lower interest income.
Amgen Inc. (NASDAQ:AMGN) is a solid dividend payer as the company has raised its payouts for 13 years in a row. The company offers a quarterly dividend of $2.38 per share and has a dividend yield of 3.34%, as of January 30.
Amgen Inc. (NASDAQ:AMGN) was included in 68 hedge fund portfolios at the end of Q3 2024, compared with 69 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these funds are worth over $1.7 billion. Among these hedge funds, Two Sigma Advisors was the company’s leading stakeholder in Q3.
2. Bank of America Corporation (NYSE:BAC)
Forward P/E Ratio: 12.64
An American multinational investment bank and financial services holding company, Bank of America Corporation (NYSE:BAC) ranks second on our list of the best cheap quarterly dividend stocks to buy now. The company possesses key competitive advantages that reinforce its industry position and provide resilience against both traditional banks and fintech competitors. Its extensive distribution network, which combines a robust digital platform with a widespread branch presence, enables the bank to expand its low-cost deposit base and attract new customers, driving revenue growth. In addition, its large scale allows for efficient cost management, supporting consistent profitability. The bank’s well-established brand also strengthens its appeal among existing and potential clients. In the past 12 months, the stock has surged by nearly 35%.
In the fourth quarter of 2024, Bank of America Corporation (NYSE:BAC) posted revenue of $25.3 billion, an increase from $22 billion in the same quarter the previous year. Net income rose to $6.7 billion, up from $3.1 billion in the prior-year period. The bank also expanded its customer base by adding 213,000 new consumer checking accounts, continuing a six-year streak of quarterly growth. Moreover, it maintained its commitment to shareholders by distributing $2 billion in dividends.
Bank of America Corporation (NYSE:BAC) is a reliable option for income investors as the company holds a strong dividend distribution history, spanning over 27 years. The company currently pays a quarterly dividend of $0.26 per share and has a dividend yield of 2.22%, as of January 30.
The number of hedge funds tracked by Insider Monkey owning stakes in Bank of America Corporation (NYSE:BAC) grew to 98 in Q3 2024, from 92 in the previous quarter. These stakes are worth over $40.6 billion in total. With nearly 798 million shares, Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q3.
1. Chevron Corporation (NYSE:CVX)
Forward P/E Ratio: 12.59
Chevron Corporation (NYSE:CVX) is an American multinational energy company that manufactures and sells a range of high-quality refined products. The company aims to remain profitable even if oil prices moderate, ensuring it can support capital projects and increase dividend payouts. To accomplish this, the company is targeting an additional $2 billion to $3 billion in structural cost reductions by 2026 while prioritizing a low-cost, high-margin production strategy. In the past 12 months, the stock has surged by nearly 5%.
Chevron Corporation (NYSE:CVX) has drawn investor interest with its strong cash position. The company’s CEO recently detailed plans to increase free cash flow by $6 billion to $8 billion next year, alongside significant cost reductions. These gains are expected to come from expanded oil production efforts in Kazakhstan, US shale regions, and the offshore Gulf of Mexico. In the latest quarter, the company reported an operating cash flow of $9.7 billion, up from $6.3 billion in the same period last year. In addition, it returned $7.7 billion to shareholders through dividends and share repurchases.
Chevron Corporation (NYSE:CVX) remains a preferred pick for income-focused investors, having increased its dividend payouts for 37 consecutive years, even through industry downturns. This track record makes it a dependable choice for those new to the sector and looking for stable investments. Unlike many exploration and production (E&P) firms, which tend to carry greater risk, Chevron provides a more reliable option with consistent returns. It currently offers a per-share dividend of $1.63 every quarter and has a dividend yield of 4.16%, as of January 30.
At the end of Q3 2023, 63 hedge funds tracked by Insider Monkey owned stakes in Chevron Corporation (NYSE:CVX), compared with 64 in the previous quarter. These stakes have a consolidated value of over $21 billion.
Overall Chevron Corporation (NYSE:CVX) ranks first on our list of the best cheap quarterly dividend stocks to invest in. While we acknowledge the potential for CVX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CVX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
