We recently published a list of 10 Best Dividend Stocks Under $5. In this article, we are going to take a look at where Silvercorp Metals Inc. (NYSE:SVM) stands against the other dividend stocks under $5.
Dividends have consistently been a strong source of returns over time. These stocks hold both theoretical and practical significance in assessing stock values. Although dividend stocks have underperformed the broader market in recent years, their long-term performance remains steady.
Since the beginning of 2024, the Dividend Aristocrats Index—which monitors companies that have consistently raised their dividends for at least 25 consecutive years—has yielded returns of over 8% for investors. However, this performance has fallen short compared to the broader market, which has surged by nearly 19% during the same period. Despite this shortfall, 2024 has been a favorable year for dividends overall. This improvement is largely attributable to several major technology firms, previously known for not paying dividends, announcing the start of their dividend programs. Moreover, these companies have collectively distributed billions in their inaugural dividend payments.
Also read: 12 Best Dividend Stocks For Steady Growth
The long-term performance of dividend stocks also takes into account periods of high interest rates, during which other asset classes typically experience declines. This doesn’t imply that dividend stocks only perform well during episodes of high interest rates. While there isn’t a clear connection between their performance and interest rates, historical data shows that they tend to remain relatively stable regardless of the rate environment. For instance, in certain periods of rising US interest rates, such as the mid-1970s, dividend-paying stocks outperformed the broader market. Conversely, as rates decreased from the mid-1980s to the mid-1990s, the performance of high-yield stocks relative to the market remained relatively stable. Even if we set aside historical data and concentrate on more recent performance, we find that elevated interest rates did not have any serious impact on the performance of dividend equities. For example, in 2022, when the Federal Reserve raised its federal funds rate seven times to tackle persistent inflation—four of which were consecutive hikes of 75 basis points—dividend stocks outperformed the broader market. This could be due to the fact that dividend-paying companies tend to be well-established and more stable, with enough confidence in their cash flows to commit to returning cash to shareholders. Moreover, committing to a dividend imposes financial discipline. Instead of using excess cash for acquisitions that may or may not create value, repurchasing shares at uncertain prices, or funding speculative growth initiatives, executives are compelled to manage payouts responsibly.
Given investors’ growing interest in dividend stocks, more companies are initiating and increasing their dividend payments. A key driver behind this trend is that many companies, particularly large tech firms, have substantial cash reserves and are rapidly boosting their free cash flows. This strong financial footing allows them to reward investors with higher dividends. According to the latest report from S&P Dow Jones Indices, companies in the index paid $153.4 billion in dividends during the second quarter of 2024, up from $151.6 billion in the previous quarter and $143.2 billion in the same period last year. The report also highlighted that there were 539 dividend increases reported, compared to 460 in the same period last year, marking a 17.2% year-over-year growth. The total amount of these increases reached $20.4 billion for the quarter, up significantly from $9.8 billion in Q2 2023. With that, we will take a look at some of the best dividend stocks under $5.
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Silvercorp Metals Inc. (NYSE:SVM)
Number of Hedge Fund Holders: 13
Share Price as of the close of August 23: $3.86
Silvercorp Metals Inc. (NYSE:SVM) is a Canadian precious metals company that is mainly involved in the exploration and development of silver-containing properties. The stock has gained over 53% since the start of 2024 because of rising silver prices. The company consistently captures investors’ attention because metals like gold and silver are commonly viewed as a hedge against inflation. In addition, escalating tensions in the Middle East are pushing investors towards “safer” options, such as precious metals.
Silvercorp Metals Inc. (NYSE:SVM) operates low-cost mines that consistently generate cash flow. The company’s strong balance sheet supports growth opportunities, ensuring the delivery of sustainable value to shareholders. Another reason for the company’s strong balance sheet is that silver has a promising future, with global decarbonization and electrification expected to drive continuous demand growth, while forecasts suggest limited supply growth ahead. In fiscal Q1 2025, the company produced around 1,146 ounces of gold and 1.7 million ounces of silver, equivalent to approximately 1.8 million ounces when including other metals. The company also sold 1.7 million ounces of silver during the quarter.
Silvercorp Metals Inc. (NYSE:SVM) generated over $40 million in operating cash flow in fiscal Q1 2025. The company ended the quarter with over $215 million available in cash and cash equivalents. It currently pays a semi-annual dividend of $0.0125 per share and has a dividend yield of 0.64%, as of August 23. Over the course of its dividend history, the company has returned over $200 million to shareholders through dividends and share repurchases, which makes SVM one of the best dividend stocks under $5.
At the end of June 2024, 13 hedge funds owned stakes in Silvercorp Metals Inc. (NYSE:SVM), which remained unchanged from the previous quarter, as per Insider Monkey’s database. These stakes have a total value of over $31 million.
Overall SVM ranks 6th on our list of the best dividend stocks under $5. While we acknowledge the potential for SVM 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 timeframe. If you are looking for an AI stock that is more promising than SVM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.