In this article, we discuss 12 best affordable dividend stocks to buy. You can skip our detailed analysis of dividend stocks and their performance in the past, and go directly to read 5 Best Affordable Dividend Stocks to Buy.
In February 2023, the Federal Reserve announced its eighth consecutive interest rate hike in a year, which marked the bank’s fastest pace of raising rates since the 1980s. Jerome H. Powell, the Fed chair, hinted at further rate increases to fully tame the soaring inflation. The fluctuating market conditions have forced anxious investors to look for new investment options, and dividend stocks seem to get their attention the most. Stocks like The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG) are becoming top choices for investors as these companies boast decades-long dividend growth streaks.
The possibility of interest rates remaining higher has made dividends the best investment option for investors this year as well. Wall Street Journal referred to data by Refinitiv Lipper, which mentioned that investors poured nearly $272 million in dividend-paying exchange-traded funds in the two weeks that ended February 22. The report also mentioned that dividend-focused ETFs saw record inflows worth over $48 billion last year.
Considering the investors’ appetite for income-generating stocks, companies are steadily raising their payouts. According to a report by S&P Dow Jones Indices, companies within the S&P 500 paid a record amount of dividends in the fourth quarter of 2022, up 10.2% from the same period last year. The report also mentioned that S&P 500 dividend payments have grown for 13 consecutive years.
Image by Steve Buissinne from Pixabay
Our Methodology:
For this list, we used the Finviz stock screener to identify dividend stocks with share prices below $20, as of February 26. These stocks have P/E ratios below 18, which means that these stocks are trading at a discount to the market and are affordable options for investors. We also measured hedge fund sentiment around each stock, according to Insider Monkey’s Q4 2022 data of 943 elite funds. The stocks are ranked in descending order of their share prices.
Best Affordable Dividend Stocks to Buy
12. KeyCorp (NYSE:KEY)
Share Price as of February 26: $18.32
P/E Ratio as of February 26: 9.54
KeyCorp (NYSE:KEY) is an Ohio-based retail banking company that provides financial services to retail and small businesses. In January, Odeon Capital upgraded the stock to Buy with a $20.36 price target, highlighting the company’s overall performance. With a share price of $18.32 and a P/E ratio of 9.54, it is one of the best affordable stocks to buy now.
On January 12, KeyCorp (NYSE:KEY) declared a quarterly dividend of $0.205 per share, which fell in line with its previous dividend. In 2022, the company stretched its dividend growth streak to 12 years. The stock has a dividend yield of 4.48%, as of February 26.
In addition to The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG), KeyCorp (NYSE:KEY) is also a great investment option for income investors.
At the end of Q4 2022, 33 hedge funds in Insider Monkey’s database owned stakes in KeyCorp (NYSE:KEY), the same as in the previous quarter. The collective value of these stakes is over $582 million. With over 7.3 million shares, Adage Capital Management was the company’s leading stakeholder in Q4.
11. Kinder Morgan, Inc. (NYSE:KMI)
Share Price as of February 26: $17.44
P/E Ratio as of February 26: 15.57
Kinder Morgan, Inc. (NYSE:KMI) is an energy infrastructure company, based in Texas. The company owns and controls oil and gas pipelines. It has been raising its dividends consistently for the past five years and currently pays a quarterly dividend of $0.2775 per share. As of February 26, the stock has a dividend yield of 6.36%. The stock is currently trading at a share price of $17.44 and has a P/E ratio of 15.57, which places it as one of the best affordable stocks to buy.
In December, Citigroup initiated its coverage of Kinder Morgan, Inc. (NYSE:KMI) with a Neutral rating and a $19 price target, appreciating the sector’s cash flow outlook for this year.
In the fourth quarter of 2022, Kinder Morgan, Inc. (NYSE:KMI) posted revenue of $4.58 billion, which saw a 3.4% growth from the same period last year. The company aims to generate nearly $5 billion in distributable cash flow in FY23.
At the end of December 2022, 34 hedge funds in Insider Monkey’s database owned investments in Kinder Morgan, Inc. (NYSE:KMI), worth over $1.11 billion collectively.
10. Huntington Bancshares Incorporated (NASDAQ:HBAN)
Share Price as of February 26: $15.29
P/E Ratio as of February 26: 10.54
Huntington Bancshares Incorporated (NASDAQ:HBAN) is an American commercial banking company, based in Ohio. The company provides services related to loans, mortgages, and credit cards. The company currently pays a quarterly dividend of $0.155 per share and has a dividend yield of 4.05%, as recorded on February 26. It maintains an 11-year streak of consistent dividend growth.
In December, DA Davidson mentioned Huntington Bancshares Incorporated (NASDAQ:HBAN) in its investors’ note and highlighted the company’s above-average profitability. Given this, the firm initiated its coverage on the stock with a Neutral rating and a $15 price target.
In Q4 2022, Huntington Bancshares Incorporated (NASDAQ:HBAN) reported a 2% loan growth from the previous quarter to $119 billion. The company’s revenue for the quarter came in at nearly $2 billion, up 19.4% from the same period last year.
Huntington Bancshares Incorporated (NASDAQ:HBAN) was a popular buy among hedge funds in Q4 2022, as 32 funds in Insider Monkey’s database owned stakes in the company, up from 23 in the previous quarter. These stakes have a consolidated value of over $224.6 million.
Aristotle Capital Boston, LLC mentioned Huntington Bancshares Incorporated (NASDAQ:HBAN) in its Q3 2022 investor letter. Here is what the firm has to say:
“Huntington Bancshares Incorporated (NASDAQ:HBAN), an Ohio-based bank holding company, was removed from the portfolio based on our belief that shares were fully valued and there were better opportunities to deploy capital elsewhere within the portfolio.”
9. Arbor Realty Trust, Inc. (NYSE:ABR)
Share Price as of February 26: $15.28
P/E Ratio as of February 26: 9.15
An American real estate investment trust company, Arbor Realty Trust, Inc. (NYSE:ABR) is next on our list of the best affordable stocks to buy now. As of February 26, the stock has a share price of $15.28 and a price-to-earnings ratio of 9.15.
In Q4 2022, Arbor Realty Trust, Inc. (NYSE:ABR) reported revenue of $113 million, which showed a 48% growth from the same period last year. At the end of December 2022, it had over $534.3 million in cash and cash equivalents, compared with $404.5 million a year ago.
On February 17, Arbor Realty Trust, Inc. (NYSE:ABR) declared a quarterly dividend of $0.40 per share, consistent with its previous dividend. The company is a Dividend Challenger, having raised its payouts for 10 consecutive years. The stock has a dividend yield of 10.47%, as of February 26.
As of the close of Q4 2022, 17 hedge funds tracked by Insider Monkey reported having stakes in Arbor Realty Trust, Inc. (NYSE:ABR), up from 13 in the previous quarter. These stakes are collectively valued at nearly $68.5 million. Among these hedge funds, Balyasny Asset Management was the company’s leading stakeholder in Q4.
8. Energy Transfer LP (NYSE:ET)
Share Price as of February 26: $12.86
P/E Ratio as of February 26: 9.32
Energy Transfer LP (NYSE:ET) is a Texas-based energy company that is involved in the transportation of natural gas and propane pipeline. In the fourth quarter of 2022, the company reported revenue of $20.5 billion, which showed a 9.7% growth from the same period last year. Its distributable cash flow at the end of December 2022 came in at $1.91 billion, compared with $1.6 billion for the same period last year.
As of February 26, Energy Transfer LP (NYSE:ET) has a share price of $12.86 with a 9.32 price-to-earnings ratio, which makes it one of the best affordable dividend stocks on our list.
On January 26, Energy Transfer LP (NYSE:ET) declared a 15% hike in its quarterly dividend to $0.305 per share. The company has been rewarding shareholders with growing dividends consistently for five years. The stock’s dividend yield on February 26 came in at 9.49%.
At the end of Q4 2022, 38 hedge funds tracked by Insider Monkey had stakes in Energy Transfer LP (NYSE:ET), compared with 33 in the previous quarter. The collective value of these stakes is over $613.4 million.
7. Star Group, L.P. (NYSE:SGU)
Share Price as of February 26: $12.37
P/E Ratio as of February 26: 14.38
Star Group, L.P. (NYSE:SGU) is an American company that manufactures home heating and air conditioning products. The company also provides related services to commercial and residential consumers. With a share price of $12.37 and a P/E ratio of 14.38, it is one of the best affordable dividend stocks on our list.
Star Group, L.P. (NYSE:SGU) currently offers a per-share dividend of $0.1525 every quarter. The company has been paying uninterrupted dividends to shareholders since 1996. As of February 26, the company’s shares boast a yield of 4.93%.
At the end of Q4 2022, 8 hedge funds tracked by Insider Monkey owned stakes in Star Group, L.P. (NYSE:SGU), the same as in the previous quarter. These stakes have a collective value of over $58.4 million. With 3.4 million shares, Bandera Partners was the company’s largest stakeholder in Q4.
6. Viatris Inc. (NASDAQ:VTRS)
Share Price as of February 26: $11.51
P/E Ratio as of February 26: 17.44
Viatris Inc. (NASDAQ:VTRS) is an American pharmaceutical industry company. In January, Jefferies upgraded the stock to Buy and also lifted its price target on the stock to $15. The firm appreciated the company’s sales and its business development strategies.
Viatris Inc. (NASDAQ:VTRS), one of the best affordable stocks on our list, initiated its dividend policy in 2021 and has raised its payout once since then. It currently offers a quarterly dividend of $0.12 per share and has a dividend yield of 4.17%, as of February 26. It can be added to dividend portfolios alongside popular dividend stocks like The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG).
As of February 26, Viatris Inc. (NASDAQ:VTRS) has a share price of $11.51 and a price-to-earnings ratio of 17.44.
At the end of Q4 2022, 47 hedge funds tracked by Insider Monkey were long Viatris Inc. (NASDAQ:VTRS), compared with 50 a quarter earlier. The stakes owned by these hedge funds are valued at $1.42 billion collectively.
Miller Value Partners mentioned Viatris Inc. (NASDAQ:VTRS) in its Q4 2022 investor letter. Here is what the firm has to say:
“Viatris Inc. (NASDAQ:VTRS) gained after reporting 3Q22 net sales of $4.07B, -10.0% Y/Y (-1% operationally), below consensus of $4.14B, and Adjusted EBITDA of $1.50B (36.8% margin), ahead of consensus of $1.44B. Free cash flow (FCF) for the quarter came in at $765.1MM, which brings trailing twelve-month (TTM) FCF to $2.88B, or a FCF yield of 22.9%. Viatris paid down ~$614MM of debt in the quarter, bringing YTD debt reduction to ~$2.1B, in-line with the company’s previously stated target of reducing debt by ~$6.5B between 2021-2023. Additionally, the company announced the acquisitions of two Ophthalmology (eyecare) companies, Oyster Point Pharma and Famy Life Sciences, for an aggregate purchase price of ~$700-750MM, with management expecting these transactions to add at least $1B in sales and $500MM in Adjusted EBITDA to Viatris by 2028.”
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Disclosure. None. 12 Best Affordable Dividend Stocks to Buy is originally published on Insider Monkey.
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