In this article, we discuss 5 dividend stocks that are too cheap to ignore. You can skip our detailed analysis of dividend stocks and their returns in the past, and go directly to read 5 Dividend Stocks That Are Too Cheap To Ignore.
As the market plunges to its new lows in 2022, investors are betting on cheap dividend stocks to generate balanced income in these times. Historically, dividend stocks have performed well during times of financial instability. Especially companies with strong dividend growth track records are more popular among investors due to their regular income. In this regard, companies like The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG) are gaining ground among investors due to their long dividend growth streaks.
Studies conducted in the past show that dividends contributed significantly to overall returns of the market. According to a report published by London Business School and Credit Suisse in 2011, the total annual average return of the US stock market from 1900 to 2011 was 5%. However, reinvested dividends took the total return to 9.4%. The report also mentioned that for long-term investors, dividends stocks are the most reliable option. Another research by Danske Capital showed that in the last ten bull markets from 2005 to 2015, dividend-paying stocks outperformed their non-dividend peers by an average of 3% per year.
With rising interest rates and high inflation this year, investors are preferring dividend stocks over other asset classes. The returns of dividend stocks also comply with investors’ inclination toward them. The MSCI World High Dividend Yield Index, which tracks the performance of large- and mid-cap stocks across 23 developed markets, fell by 16.17% in 2022 through September, compared with a decline of 25.13% in the MSCI World index during the same period.
Image by Steve Buissinne from Pixabay
Our Methodology:
The dividend stocks mentioned below have share prices below $35, as of October 10. We reviewed dividend policies, cash position, and the overall financial health of these companies to determine the best dividend stocks. The stocks are ranked according to their share prices.
10 Dividend Stocks That Are Too Cheap To Ignore
10. Rithm Capital Corp. (NYSE:RITM)
Share Price as of October 10: $7.29
Rithm Capital Corp. (NYSE:RITM) is an American company that provides capital and services to real estate and financial sectors. The company was previously known as New Residential Investment Corp and changed its name this August.
Rithm Capital Corp. (NYSE:RITM)’s cash position remained stable during Q2 2022 despite the current financial turmoil. It reported earnings for distribution of $145.8 million and of this amount, it paid $116 million in dividends. The company’s operating cash flow for the quarter came in at $1.46 billion, compared with $320 million in the prior-year quarter.
On September 22, Rithm Capital Corp. (NYSE:RITM) declared a quarterly dividend of $0.25 per share, consistent with its previous dividend. Since 2013, the company has cumulatively paid $4.1 billion in dividends to shareholders, coming through as one of the best dividend stocks on our list. As of October 10, the stock’s dividend yield came in at 13.72%.
In September, Piper Sandler upgraded Rithm Capital Corp. (NYSE:RITM) to Neutral with a $9 price target, highlighting the company’s large mortgage servicing rights portfolio.
At the end of Q2 2022, 18 hedge funds tracked by Insider Monkey owned stakes in Rithm Capital Corp. (NYSE:RITM), compared with 19 in the previous quarter. The collective value of these stakes is over $50.5 million. HBK Investments was the company’s leading stakeholder in Q2.
In addition to some of the best dividend stocks like The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG), Rithm Capital Corp. (NYSE:RITM) is also eyed by investors due to its growing payouts.
9. Hanesbrands Inc. (NYSE:HBI)
Share Price as of October 10: $7.37
Hanesbrands Inc. (NYSE:HBI) is a North Carolina-based multinational clothing company that specializes in everyday basic wear. Though the company has not raised its dividends since 2017, it maintained its payouts even during the pandemic. It currently pays a quarterly dividend of $0.15 per share and has a dividend yield of $8.14 per share. In Q2, the company paid its 38th consecutive dividend to shareholders, which makes it one of the best dividend stocks under $35.
In Q2 2022, Hanesbrands Inc. (NYSE:HBI) has a total of $1 billion available, $248 of which represented the cash and cash equivalents and approximately $720 million of available capacity under its credit facility. The company’s inventory at the end of the quarter stood at $2.09 billion, showing a 37% growth from the same period last year.
In August, CL King maintained a Buy rating on Hanesbrands Inc. (NYSE:HBI) with a $15 price target, appreciating the company’s recent quarterly earnings. The firm also mentioned that retailers have been noting changing consumer behaviors after the pandemic.
At the end of Q2 2022, 18 hedge funds tracked by Insider Monkey owned stakes in Hanesbrands Inc. (NYSE:HBI), down from 23 in the previous quarter. These stakes have a total value of over $164.8 million.
Chartwell Investment Partners mentioned Hanesbrands Inc. (NYSE:HBI) in its Q2 2022 investor letter. Here is what the firm has to say:
“The three worst-performing stocks in the Dividend Equity accounts includes Hanesbrands (NYSE:HBI, 1.1%), down 30.1%. Hanesbrands’ management is executing well, but the challenging environment includes supply-chain headwinds, higher input costs and some post-Covid inventory build-up.”
8. AT&T Inc. (NYSE:T)
Share Price as of October 10: $14.9
AT&T Inc. (NYSE:T) is a multinational telecommunications company that is also one of the largest providers of cell phone services in the US. In September, Barclays maintained an Equal Weight rating on the stock with an $18 price target, acknowledging the company’s overall pricing growth and cable headline metrics.
AT&T Inc. (NYSE:T) made it to our list of the best dividend stocks as the company holds a 23-year track record of consistent dividend growth. It currently pays a dividend of $0.2775 per share every quarter. The stock’s dividend yield stood at 7.43% on October 10.
At the end of Q2 2022, 55 hedge funds tracked by Insider Monkey owned stakes in AT&T Inc. (NYSE:T), down from 74 in the previous quarter. These stakes have a total value of over $1.7 billion. With nearly $240 million worth of stakes, D E Shaw was one of the company’s most prominent stakeholders in Q2.
Chartwell Investment Partners mentioned AT&T Inc. (NYSE:T) in its Q2 2022 investor letter. Here is what the firm has to say:
“In the Dividend Equity accounts, the three best performers in Q2 includes AT&T (NYSE:T, 2.5%), up 17.1%. AT&T completed the spin of the WarnerMedia business (HBO, CNN, etc.), and the market seemed to like the “back-to-basics” approach. Also, the telco business is expected to do relatively well in an inflationary environment.”
7. Manulife Financial Corporation (NYSE:MFC)
Share Price as of October 10: $15.9
Manulife Financial Corporation (NYSE:MFC) is a Canadian insurance company that also provides financial services to its consumers. In Q2 2022, the company reported an operating cash flow of over $4.8 billion, up from $2.5 billion in the previous quarter. Its global wealth and asset management net inflows stood at over $1.7 billion, with an expense efficiency ratio of 49.2%.
Manulife Financial Corporation (NYSE:MFC) has been raising its dividends consistently for the past 8 years. Moreover, its five-year dividend CAGR stood at 11.14%, which makes it one of the best dividend stocks on our list. It currently pays a quarterly dividend of C$0.33 per share for a dividend yield of 6.35%, as of October 10.
Street analysts presented a positive stance on Manulife Financial Corporation (NYSE:MFC) due to the company’s growing revenue and improvement in its overall sales. In August, both Desjardins and Canaccord raised their price target on the stock to C$25.
At the end of Q2 2022, 15 hedge funds in Insider Monkey’s database owned stakes in Manulife Financial Corporation (NYSE:MFC), with a total value of over $155 million. With over 2.6 million shares, Galibier Capital Management owned the largest position in the company in Q2.
Harding Loevner mentioned Manulife Financial Corporation (NYSE:MFC) in its Q2 2022 investor letter. Here is what the firm has to say:
“Manulife Financial Corporation (NYSE:MFC), the Canadian life insurer operating primarily in North America and Asia, is a new holding. Manulife offers a full suite of life insurance products as well as retirement and wealth management services. While the wealth management and retirement products appeal to the aging populations of the Western world, long-term life insurance products address the needs of the growing number of middle-class families in places like China and southeast Asia. COVID-19-induced lockdowns in China brought the shares down to a significant discount to our estimate of long-term value. The holding now serves as a nice diversifier to our Asia-centered insurers AIA and Ping An.”
6. Franklin Resources, Inc. (NYSE:BEN)
Share Price as of October 10: $21.85
Franklin Resources, Inc. (NYSE:BEN) is one of the world’s largest investment managers. On August 29, the company declared a quarterly dividend of $0.29 per share, in line with its previous dividend. The company is one of the best dividend stocks on our list as it has been raising its dividends consistently for the past 42 years with a five-year dividend CAGR of 7.71%. The stock’s dividend yield came in at 5.31%, as of October 10.
In Q2 2022, Franklin Resources, Inc. (NYSE:BEN) reported an operating cash flow of $820 million, up from $506 million during the same period last year. Its free cash flow stood at $806.7 million, compared with $461.7 million in the prior-year quarter. The company ended the quarter with $5.5 billion available in cash and cash equivalents.
At the end of Q2 2022, 24 hedge funds in Insider Monkey’s database owned investments in Franklin Resources, Inc. (NYSE:BEN), with a total value of over $217.2 million.
Franklin Resources, Inc. (NYSE:BEN) can be a good addition to dividend portfolios alongside some of the best dividend stocks like The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG).
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Disclosure. None. 10 Dividend Stocks That Are Too Cheap To Ignore is originally published on Insider Monkey.