In this article we will take a look at 10 cheap dividend stocks with high yields.
Dividend investing is a practice ingrained in investor circles, with many prospective investors constantly on the lookout for high-yielding stocks with a track record of financial stability and consecutive annualized dividend growth. The popularity of dividend investing can best be understood by taking a look at a study by Hartford Funds, which offers 2021 insight into the realm of dividend investing. According to this study, dividends have contributed to 84% of the S&P 500’s Index all the way back to 1970. Furthermore, the S&P 500 Index Total Returns from 1960 to 2020 without any dividends stood at a mere $627,161 compared to a whopping $3,845,730 of returns after reinvesting dividends within the same timeframe. In the 2010s alone, dividends contributed about 17% to the total returns of the S&P 500 Index.
The above information is not meant to conclude that dividends are the most important thing to consider when trying to decide where to invest. However, they are a testament to the fact that dividends are a vital contributor to both the S&P 500 Index and to individual investors, based on financial records such as the ones above, and the convenience of using dividend stocks to earn on the side. However, past examples of companies like General Motors Company (NYSE: GM) also show us how dividend investing can be risky and quite dangerous. After paying reliable dividends for decades in its prime, General Motors Company (NYSE: GM) had to suspend its dividend in 2008, after first cutting it in half to 25 cents a share. The stock price for the company also fell during this time of financial strife, from $60 to $20 in 2006. While attempting to save itself, General Motors Company (NYSE: GM) tried everything from selling $4 to $7 billion in assets, to cutting 20% of its salary costs, but to no avail. In 2009, the company declared bankruptcy, its stock price fell to zero, and it was only saved from complete ruin because of the US government bailing it out.
It has become extremely difficult to find valuable dividend stocks amid the financial volatility, which is also shaking the hedge fund industry. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
That’s why instead of just focusing on those big fat yields, you should also take into account long-term growth prospects, fundamentals and value metrics while choosing dividend stocks to invest in.
Even though dividend stocks like Altria Group Inc (NYSE: MO), Coca-Cola Co (NYSE: KO) and IBM Common Stock (NYSE: IBM) are very tempting because of their consistent dividend hikes and long-term growth prospects, not everyone can buy these because they are expensive.
Photo by Austin Distel on Unsplash
Our Methodology
The stocks chosen to be added to the following list were carefully selected after considering their share price to see if it was under $20, while also having a dividend yield of 5% or above. These stocks are also popular among over 880 hedge funds tracked by Insider Monkey.
Without further ado, read ahead to see our list of 10 cheap dividend stocks with high yields.
Cheap Dividend Stocks with High Yields
10. Sumitomo Mitsui Financial Group, Inc. (NYSE: SMFG)
Dividend Yield: 5%
Sumitomo Mitsui Financial Group, Inc. (NYSE: SMFG) is a Japanese commercial banking company. Its headquarters are in Chiyoda City, Tokyo, and it was founded in 2002. Currently traded at $7.16 with a dividend yield of 10%, Sumitomo Mitsui Financial Group, Inc. (NYSE: SMFG) ranks 10th on our list of cheap dividend stocks with high yields.
Sumitomo Mitsui Financial Group, Inc. (NYSE: SMFG) has been indicating interest in the digital sector since December 2020, when it invested an undisclosed sum in nCino, Inc. (NASDAQ: NCNO), a cloud banking software provider. This April, Sumitomo Mitsui Financial Group, Inc. (NYSE: SMFG) also announced plans to take a 49% equity stake in VPBank Finance Co by October.
Sumitomo Mitsui Financial Group, Inc. (NYSE: SMFG) has gained 23.62% year to date and has a market cap of $49.4 billion. The company also earned $0.68 per share over its four most recent quarters.
9. Sibanye Stillwater Limited (NYSE: SBSW)
Forward Dividend Yield: 5.19%
Sibanye Stillwater Limited (NYSE: SBSW) is a South African multinational gold mining company. It has a diverse portfolio of platinum group metals found in South Africa and the US. The company also has gold and base metals operations and a variety of mining projects in the US and South Africa. With a share price as low as $18.93 and a dividend yield of 5.19%, the company is 9th on our list of cheap dividend stocks with high yields.
Sibanye Stillwater Limited (NYSE: SBSW) reported Q1’21 results this year, in which it was announced that the company’s earnings saw a 78% increase year over year due to an increase in metals prices alongside an improvement in Sibanye Stillwater Limited’s (NYSE: SBSW) operational performance. The company also revealed an increase in prices for four of the platinum group metals by 59% year over year, while gold prices increased by 8%.
Sibanye Stillwater Limited (NYSE: SBSW) gained 8% year to date and has a market cap of nearly $14 billion. The company makes $0.98 payments per share in dividends.
Like Altria Group Inc (NYSE: MO), Coca-Cola Co (NYSE: KO), IBM Common Stock (NYSE: IBM), Energy Transfer LP (NYSE: ET) and Lumen Technologies, Inc. (NYSE: LUMN), Sibanye Stillwater Limited (NYSE: SBSW) is one of the best dividend stocks to buy now.
8. Energy Transfer LP (NYSE: ET)
Dividend Yield: 5.61%
Energy Transfer LP (NYSE: ET) is an American gas industry company, with headquarters in Dallas, Texas. Some of its subsidiaries include Energy Transfer Partners and Sunoco LP. The company ranks 8th on our list of cheap dividend stocks with high yields, with an $11.05 share price and a 5.61% dividend yield.
Last month, Energy Transfer LP (NYSE: ET) announced an expectation to gain $2.4 billion from Winter Storm Uri, which was responsible for knocking out the power and interrupted natural gas distribution in Texas back in February. Zack’s Investment Research also changed Energy Transfer LP’s (NYSE: ET) rating from “Hold” to “Strong-buy” on June 7th. Raymond James increased their price objective on the company’s shares from $9 to $10 back in April, and gave Energy Transfer LP (NYSE: ET) a “Strong-buy” rating then.
The company has a market cap of almost $30 billion and made $1.29 per share in the past four quarters. Energy Transfer LP (NYSE: ET) also gained 81.15% year to date.
Like Altria Group Inc (NYSE: MO), Coca-Cola Co (NYSE: KO), IBM Common Stock (NYSE: IBM), Energy Transfer LP (NYSE: ET) and Lumen Technologies, Inc. (NYSE: LUMN), Energy Transfer LP (NYSE: ET) is one of the best dividend stocks to buy now.
7. Kinder Morgan, Inc. (NYSE: KMI)
Dividend yield: 5.74%
Kinder Morgan, Inc. (NYSE: KMI) is one of the largest energy infrastructure companies in North America and focuses on the control of oil and gas pipelines and terminals. The company currently owns interests in or operated around 85,000 miles of pipelines and 152 terminals. With a $19 share price and a 5.74% dividend yield, Kinder Morgan, Inc. (NYSE: KMI) ranked 7th on our list of the cheapest dividend stocks with high yields.
Last week, Kinder Morgan, Inc. (NYSE: KMI) announced its purchase of Stagecoach Gas Services LLC for $1.23 billion. This decision came about as a result of the company’s goal to expand in the northeast US market.
The company has a market value of $43 billion and pays $1.08 per share in dividends. Its EPS for the past four quarters stood at $0.80, and the stock gained 40.12% year to date.
Like Altria Group Inc (NYSE: MO), Coca-Cola Co (NYSE: KO), IBM Common Stock (NYSE: IBM), Energy Transfer LP (NYSE: ET) and Lumen Technologies, Inc. (NYSE: LUMN), Kinder Morgan, Inc. (NYSE: KMI) is one of the best dividend stocks to buy now.
6. Vodafone Group Plc (NYSE: VOD)
Dividend Yield: 5.97%
Vodafone Group Plc (NYSE: VOD) is a British multinational telecommunications company. It provides telecommunications services in Asia, Africa, Europe, and Oceania. The company ranked 6th on our list of the cheapest high-yielding dividend stocks because of its 5.97% dividend yield and its $18.66 share price. The stock ranks 6th in our list of cheap dividend stocks with high yields.
For FY22, the company expects adjusted EBITDA to come in between €15.0 to €15.4 billion.
Vodafone Group Plc (NYSE: VOD) has a market cap of $51.43 billion, and with its high dividend yield, pays $1.1 per share in dividends. The stock has also gained 5.05% year to date.
Like Altria Group Inc (NYSE: MO), Coca-Cola Co (NYSE: KO), IBM Common Stock (NYSE: IBM), Energy Transfer LP (NYSE: ET) and Lumen Technologies, Inc. (NYSE: LUMN), Vodafone Group Plc (NYSE: VOD) is one of the best dividend stocks to buy now.
5. Lumen Technologies, Inc. (NYSE: LUMN)
Dividend Yield: 6.64%
Lumen Technologies, Inc. (NYSE: LUMN) is an American telecommunications company. It has headquarters in Monroe, Louisiana, and offers communications, network services, and a range of other telecommunications services. Lumen Technologies, Inc. (NYSE: LUMN) is a member of the Fortune 500 and the S&P 500 Index. With its $15.07 share price and 6.64% dividend yield, the company ranks 5th on our list of cheap and high-yielding dividend stocks.
Lumen Technologies, Inc. (NYSE: LUMN) revealed its Q121 report earlier this year, which showed a net income of $475 million for this quarter, an increased from the $314 million net income the company had in Q120. The company’s EPS also rose compared to Q120, at $0.44 this quarter compared to $0.29 last year. Lumen Technologies, Inc. (NYSE: LUMN) also reported the generation of a free cash flow of $850 million this quarter, compared to $385 million in Q120. All the above indicate significant growth.
The company pays $1 per share at its current yield rate, and has a market cap of $16.7 billion. Lumen Technologies, Inc. (NYSE: LUMN) also gained 55.04% year to date.
4. Annaly Capital Management, Inc. (NYSE: NLY)
Dividend Yield: 9.6%
Annaly Capital Management, Inc. (NYSE: NLY) is a real estate investment trust company organized in Maryland with its principal office in New York City. The company borrows money through short-term repurchase agreements and reinvests the proceeds in asset-backed securities. It ranks 4th on our list of the 10 cheapest dividend stocks with high yields.
In the first quarter of 2021, Annaly Capital Management, Inc. (NYSE: NLY) brought in revenue valued at $2.05 billion and it has a market cap of $12.68 billion. It also has a forward PE ratio of 8.2. The stock has gained 8.26% in the past 6 months and 11.42% year to date.
3. Telefônica Brasil S.A. (NYSE: VIV)
Dividend Yield: 10%
Telefônica Brasil S.A. (NYSE: VIV), trading as Vivo, is a telecommunications group based in Brazil. The company is a subsidiary of the Spanish Telefónica. With a share price of $9.39 and a dividend yield of 8.38%, Telefônica Brasil S.A. (NYSE: VIV) has made it to our list of the 10 cheapest dividend stocks with high yields.
According to Telefônica Brasil S.A.’s (NYSE: VIV) Q121 reports, the company’s net income for the quarter was worth $186 million, an 18.3% growth year over year. Free cash flow after leasing payments was around $434 million.
Telefônica Brasil S.A. (NYSE: VIV) has gained 2.66% year to date, has a market value of $15.7 billion, and pays $0.79 a share in dividends.
2. Orange S.A. (NYSE: ORAN)
Dividend Yield: 8.47%
Orange S.A. (NYSE: ORAN) is a French telecommunications company and is ranked 2nd on our list of the cheapest high-yielding dividend stocks. The company has a dividend yield of 8.47% and a share price of $12.87.
In their Q121 report, Orange S.A. (NYSE: ORAN) revealed a 0.5% increase in revenues which now stand at over $12 billion, growth the company believes to result from equipment sales which rose by 10.8% and fixed broadband services which rose by 5.3%.
Orange S.A. (NYSE: ORAN) has a market value of $33.8 billion and pays $1.09 per share with its current dividend yield. The company’s EPS for the past quarters was $2.09, and its stock gained 4.04% year to date.
1. Telefónica, S.A. (NYSE: TEF)
Dividend Yield: 8%
Telefónica, S.A. (NYSE: TEF), a Spanish multinational telecommunications company, is ranked first on our list of cheap and high-yielding dividend stocks with a share price of $5.06 and a dividend yield of 8%. The company has headquarters in Madrid, Spain, and is one of the largest telephone operators across the globe.
According to Telefónica, S.A.’s (NYSE: TEF) financial reports, the company made $52 million in revenues in 2020 and $1.9 million in net income. The company also gained 22.61% year to date, while it gained 3.3% on June 10th. Telefónica, S.A. (NYSE: TEF) has a market value of $27.2 billion.
See also 30 Dividend Kings of 2021 (Part I) and 15 Fastest Growing Dividend Stocks.
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Disclosure: None. 10 Cheap Dividend Stocks With High Yields is originally published on Insider Monkey.
