We recently compiled a list of the 10 Best Dividend-Paying Stocks Under $15. In this article, we are going to take a look at where Kinross Gold Corporation (NYSE:KGC) stands against the other dividend-paying stocks under $15.
During the bull market driven by the “Magnificent Seven” stocks, dividend stocks lagged in performance. Since the beginning of 2024, the Dividend Aristocrats Index has increased by only 5.50%, while the Nasdaq has risen by 13.6%. That said, the performance of tech stocks becomes less significant when considering the long-term returns of dividend stocks. Dividend-paying stocks with strong balance sheets and stable yields can offer investors consistent income, protection against market declines, and steady growth for their investments.
When investing in dividend stocks, it might seem logical to invest in stocks with the highest yields. However, according to analysts, concentrating solely on yield may not be the most effective investment approach. Not all dividend yields are equally secure, as companies under financial strain may suspend or cut their dividend payments. Therefore, investors are encouraged to prioritize the sustainability of dividends and, if possible, seek out companies with a track record of dividend growth. To know more about strong dividend payers, have a look at Best Dividend Stocks of All Time.
Historically, companies that consistently grow their dividends have outperformed those that do not pay dividends, while also exhibiting less volatility. Although dividends are not guaranteed and can fluctuate, just like in today’s time, they have played a major role in equity total returns over the decades. From 1930 to 2023, dividends and their reinvestment accounted for 40% of the annualized total return of the broader market, with the remaining return coming from capital appreciation.
Companies globally are distributing record dividends to shareholders, largely due to their robust balance sheets. With companies holding near-record levels of cash and liquid assets, they are increasingly returning this cash to investors through dividends. Global dividends grew from $1.23 trillion in 2020 to $1.66 trillion in 2023, according to a report by Janus Henderson. The firm forecasts total dividends to reach $1.72 trillion for 2024, up 3.9% on a headline basis.
A company’s dividend payout ratio is an important measure of how flexible its dividend policy is. Firms that only earn enough to cover their dividends or pay out most of their earnings as dividends might face risks from competitive pressures, as their cash flow may not be adequate to sustain operations. Moreover, companies with high dividend yields or, more critically, high payout ratios might be at risk of limited future growth, which could impact both share price appreciation and the potential for increasing dividends. According to data collected by Nuveen, stocks with the highest payout ratios have not been the strongest long-term performers. Over the past 20 years, companies with medium and medium-high payout ratios that paid dividends have generally delivered better performance.
Consistently growing dividends is a challenging target, as it requires companies to be financially very stable. For companies that are still in the growth phase and have lower share prices, evaluating dividend sustainability becomes a straightforward metric to consider. In this article, we will take a look at some of the best dividend stocks under $15.
Our Methodology:
For this list, we used a Finviz stock screener to find dividend stocks trading below $15 as of the close of July 31. From the initial list, we narrowed down the selection to companies that pay regular dividends to shareholders and possess strong dividend policies, ensuring consistent future dividends. From the resultant list, we picked 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s Q1 2024 database of 920 hedge funds and their holdings. 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).
Aerial shot of a mine entrance, the bedrock of the company’s gold and silver extraction.
Kinross Gold Corporation (NYSE:KGC)
Number of Hedge Fund Holders: 31
Share Price as of the Close of July 31: $9.06
Kinross Gold Corporation (NYSE:KGC) is a Canadian silver and gold mining company that has operations across multiple countries. The company reported strong earnings in the second quarter of 2024. Its gold equivalent production reached 535,338 ounces, up from 527,399 ounces in the previous quarter. This growth was fueled by increased throughput and improved grades at various mining sites, reflecting efficient operations and strong production capabilities.
As a dividend stock, Kinross Gold Corporation (NYSE:KGC) is favored by investors because of its robust cash generation. In Q2 2024, the company generated $604 million in operating cash flow and its attributable free cash flow came in at $346 million. This strong free cash flow also allowed the company for $200 million in debt repayment. The company remains committed to carefully managing its operations, with an emphasis on maintaining cost efficiency and capital discipline while progressing with projects and exploration targets to enhance future value. Additionally, it continues to reinforce its investment-grade balance sheet and reduce debt.
Kinross Gold Corporation (NYSE:KGC) reached its all-time low in November 2000, trading at approximately $1.31 per share. This decline was caused by volatile gold prices, operational difficulties, and significant debt levels. Since then, the stock has surged by nearly 568%, with exceptional performance during the Great Recession of 2008. It also hit one of its peaks in April 2008, reaching $22.70 per share.
Kinross Gold Corporation (NYSE:KGC) started paying dividends in 2020 and has paid regular dividends to shareholders since then. It offers a quarterly dividend of $0.03 per share and has a dividend yield of 1.37%, as of August 1.
As of the end of the March quarter of 2024, 31 hedge funds owned stakes in Kinross Gold Corporation (NYSE:KGC), down from 36 in the preceding quarter. These stakes are worth over $374.3 million in total.
Overall KGC ranks 3rd on our list of the best dividend-paying stocks to buy under $15. You can visit 10 Best Dividend-Paying Stocks Under $15 to see the other dividend-paying stocks that are on hedge funds’ radar. While we acknowledge the potential of KGC 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 KGC 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.
