In this article, we will take a detailed look at the 13 Best Low-Priced Dividend Stocks To Invest In. For a quick overview of such stocks, read our article 5 Best Low-Priced Dividend Stocks To Invest In.
Stocks rebounded sharply in 2023 despite recession clouds and macro uncertainty. This development did not bode well for dividend investors who were bracing for impact. After the beginning of a strong bear market in 2022, investors injected a whopping $60 billion in dividend-focused ETFs. But these ETFs failed to perform in 2023 as a strong rally led by AI boom saw investors flocking to technology stocks. But does this development make dividend stocks unattractive? Data shows that dividends stocks like The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL) and PepsiCo, Inc. (NASDAQ:PEP) outperform when markets are going through uncertainty and events have proved that the US economy is still not out of the woods. If we analyze the long-term performance of dividend stocks by overlooking the short-term market cycles, it’s clear that dividend stocks have performed impressively in the past.
From 1960 through 2022, 69% of the total return of the S&P 500 Index came courtesy of dividend investing and compounding, according to a report by Hartford Funds entitled “The Power of Dividends.”
The report also said that from 1930 to 2022, dividend income’s contribution to the total return of the S&P 500 Index on average came in at 41%.
In this backdrop, it would make sense to take a look at some dividend stocks that are trading at low prices with healthy yields.
Photo by Dan Dennis on Unsplash
Methodology
For this article we first used a stock screener to identify dividend stocks with over 3% dividend yield and stock prices less than $15 as of December 15. From the resultant dataset we picked 13 stocks with the highest number of hedge fund investors.
13. Huntington Bancshares Incorporated (NASDAQ:HBAN)
Number of Hedge Fund Investors: 27
Ohio-based Huntington Bancshares Incorporated (NASDAQ:HBAN) ranks 13th in our list of the best low-priced dividend stocks to buy according to hedge funds.
Out of the 910 hedge funds in Insider Monkey’s database, 27 funds had stakes in Huntington Bancshares Incorporated (NASDAQ:HBAN).
During Q3 earnings call, Huntington Bancshares Incorporated (NASDAQ:HBAN) talked about its future expectations:
As we think about Q4, our expectation is to have to see a NIM of between 305 basis points and 310 basis points, which is around 5 basis points or 10 basis points better than I would have thought this time last quarter. And it’s really driven by the benefits we’re seeing coming through from the higher for longer rate scenario, which as we’ve noted, we would expect to be accretive to overall NIM, and that is bearing fruit. Based on the trends we’re seeing in earning assets, I expect the dollars of NII in Q4 will be down around 4% to 5% from Q3 and informing a trough both in NIM ratio and the NIM and net interest income dollars in the fourth quarter then trending higher from there. The NIM outlook for 2024, I expect to be flat to rising, as I noted.
And I think the things you’re going to see are continued really solid progress on the fixed asset repricing, major asset categories on the fixed side this quarter are seeing, again, sequential increases since Q3 and we’ll expect to see that continuing on, particularly in the higher for longer scenario.
Unlike The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and PepsiCo, Inc. (NASDAQ:PEP), which are mature dividend stocks with dividend growth history, HBAN is a small company that is not highly popular among hedge funds.
12. Western Union Co (NYSE:WU)
Number of Hedge Fund Investors: 27
Financial services company Western Union Co (NYSE:WU) shares have lost about 15% year to date through December 16. It is among the high-yield dividend stocks in our list, with a dividend yield of over 7% as of December 16.
A total of 27 hedge funds in Insider Monkey’s database had stakes in Western Union Co (NYSE:WU).
Ariel Focus Fund made the following comment about The Western Union Company (NYSE:WU) in its third 2023 investor letter:
“Global leader in money transfer services The Western Union Company (NYSE:WU), also advanced following a top- and bottom-line earnings beat and subsequent raise in full-year guidance. These results were aided by regulatory change in Iraq and margin expansion in the retail business. Meanwhile, management continues to return capital to shareholders through dividends and share repurchases. Although the company anticipates the macroeconomic environment will continue to slow, it reminded investors remittances have proved resilient in prior periods of economic contraction. At current levels, WU is trading at a discount to our estimate of private market value.”
11. Newell Brands Inc (NASDAQ:NWL)
Number of Hedge Fund Investors: 27
Consumer products company Newell Brands Inc (NASDAQ:NWL) ranks 11th in our list of the best low-priced dividend stocks to invest in according to hedge funds.
Insider Monkey’s database of 910 hedge funds shows that 27 funds had stakes in Newell Brands Inc (NASDAQ:NWL). The biggest stakeholder of Newell Brands Inc (NASDAQ:NWL) during this period was Richard S. Pzena’s Pzena Investment Management which owns a $495 million stake in Newell Brands Inc (NASDAQ:NWL).
10. Algonquin Power & Utilities Corp (NYSE:AQN)
Number of Hedge Fund Investors: 28
Canadian renewable energy and utility company Algonquin Power & Utilities Corp (NYSE:AQN) ranks 10th in our list of the best low-priced dividend stocks to buy now. In November, Algonquin Power & Utilities Corp (NYSE:AQN) declared a dividend of $0.1085 per share. Dividend yield at the time came in at 7.76%.
A total of 28 hedge funds in Insider Monkey’s database were long Algonquin Power & Utilities Corp (NYSE:AQN). The biggest hedge fund stakeholder of Algonquin Power & Utilities Corp (NYSE:AQN) was Jeffrey Smith’s Starboard Value LP which owns a $346 million stake in Algonquin Power & Utilities Corp (NYSE:AQN).
9. Organon & Co (NYSE:OGN)
Number of Hedge Fund Investors: 33
With a dividend yield of about 8%, New Jersey-based pharmaceutical company Organon & Co (NYSE:OGN) ranks 9th in our list of the best low-priced dividend stocks.
Of the 910 hedge funds in Insider Monkey’s database, 33 fund had stakes in Organon & Co (NYSE:OGN).
Organon & Co’s (NYSE:OGN) CFO Matthew Walsh, while answering a question about Organon & Co’s (NYSE:OGN) dividend safety and FCF, said in Q3 earnings call:
And when you combine that with the fact that we expect to see lower onetime costs from the separation next year, we’re actually quite optimistic about what next year’s free cash flow number will look like and when we guide to that in February.
In terms of capital allocation, we’ve been, since the spin-off, trying to achieve a balance of capital allocation between investments and growth for the future, and balancing that against the near term and certain benefits of leverage reduction. That equation has been tilted a little bit more, given where interest rates have gone, the near-term benefits of debt reduction look more attractive. So as we’ve said in the past a few times, it raises the bar on the type of business development and M&A transactions that we would execute. And that’s one of the reasons why you’ve seen, relatively speaking, a lower level of activity in BD in 2023 than you saw in 2022. We continue to believe that the business — the cash flow profile that the business exhibits supports a dividend, certainly at the level that we have.
Read the entire earnings call transcript here.
Miller Value Income Strategy made the following comment about Organon & Co. (NYSE:OGN) in its Q3 2023 investor letter:
“Organon & Co. (NYSE:OGN) reported 2Q23 revenue of $1.61B, +1.5% Y/Y, ahead of consensus of $1.57B, and Adjusted EPS from continuing operations of $1.31, +4.8% Y/Y, well ahead of consensus of $1.00. Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for the quarter came in at $530MM, or a margin of 33.0%, +66bps Y/Y. Biosimilars revenue increased 14% Y/Y (+15% excluding the impact of foreign currency (ex-FX)), driven by a 20% Y/Y ex-FX increase in Renflexis sales, while the Women’s Health segment saw top-line growth of 8% (+10% ex-FX), driven primarily by Nexplanon sales growth of 12% ex-FX. The company maintained a quarterly dividend of $0.28/share, or an annualized yield of ~6.5%. Management revised FY23 guidance for revenue of $6.35B (vs. prior guidance of $6.30B), and an Adjusted EBITDA margin of 32.3% (vs. prior guidance of 32.0%), at the respective midpoints, implying FY23 Adjusted EBITDA of $2.05B, or an Enterprise Value (EV)/EBITDA multiple of ~6.3x.”
8. Vale SA (NYSE:VALE)
Number of Hedge Fund Investors: 34
Mining company Vale SA (NYSE:VALE) is a notable dividend stock in our list. In November Vale SA (NYSE:VALE) stock was upgraded by Goldman Sachs to Buy from Neutral.
“The story is now too attractive to ignore and investors will slowly increase exposure as confidence around iron ore supply/demand balance in 2024 increases,” Goldman’s Marcio Farid said in a report.
7. Energy Transfer LP Unit (NYSE:ET)
Number of Hedge Fund Investors: 34
Energy Transfer LP Unit (NYSE:ET) is a high dividend yield stock in our list of the best low-priced stocks to buy for dividends.
As of the end of the third quarter of 2023, 34 hedge funds were long Energy Transfer LP Unit (NYSE:ET). The most significant stake in Energy Transfer LP Unit (NYSE:ET) belongs to David Abrams’ Abrams Capital Management which owns a $250 million stake in Energy Transfer LP Unit (NYSE:ET).
Like The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL) and PepsiCo, Inc. (NASDAQ:PEP), ET is a dividend stock popular among hedge funds.
6. New York Community Bancorp, Inc. (NYSE:NYC)
Number of Hedge Fund Investors: 35
With a dividend yield of 6% and a stock price of $10.96 as of December 16, New York Community Bancorp, Inc. (NYSE:NYC) ranks 6th in our list of the best low-priced dividend stocks to invest in according to hedge funds.
During the third quarter of this year, New York Community Bancorp, Inc. (NYSE:NYC) earned $0.36 per share, beating estimates by $0.01. Revenue in the quarter jumped 203% year over year.
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Disclosure. None. 13 Best Low-Priced Dividend Stocks To Invest In was initially published on Insider Monkey.