In this article, we discuss 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).
5. Matthews International Corporation (NASDAQ:MATW)
Share Price as of October 10: $22.23
Matthews International Corporation (NASDAQ:MATW) is a provider of brand solutions and offers its services globally. In June, the company announced the acquisition of two German engineering firms which have combined annual revenue of over $100 million. This step was taken to enhance the company’s combined engineering capabilities.
Matthews International Corporation (NASDAQ:MATW) has been raising its dividends consistently for the past 23 years and its five-year dividend CAGR stands at 5.29%. This makes the company one of the best dividend stocks on our list. Currently, it pays a quarterly dividend of $0.22 per share and has a yield of 3.96%, as recorded on October 10.
In July, B. Riley maintained its Buy rating on Matthews International Corporation (NASDAQ:MATW) with a $22 price target, highlighting the company’s fiscal Q3 results. The firm acknowledged the company’s balance sheet and its improving fundamentals.
At the end of Q2 2022, 17 hedge funds tracked by Insider Monkey owned stakes in Matthews International Corporation (NASDAQ:MATW), up from 15 in the previous quarter. The collective value of these stakes is over $52 million. Among these hedge funds, GAMCO Investors owned the largest position in the company in Q2.
4. Enterprise Products Partners L.P. (NYSE:EPD)
Share Price as of October 10: $24.99
Enterprise Products Partners L.P. (NYSE:EPD) is a Texas-based midstream natural gas and crude oil pipeline company. It is one of the largest corporations in the US by revenue. In Q2 2022, the company reported strong cash generation, with its distributable cash flow coming in at $2 billion, compared with $1.6 billion during the same period last year. The company’s operating cash flow for the quarter also jumped to $2.1 billion, from $1.7 billion in the prior-year quarter.
On October 5, Enterprise Products Partners L.P. (NYSE:EPD) declared a quarterly dividend of $0.475 per share, in line with its previous dividend. The company is one of the best dividend stocks on our list because it has raised its dividends 22 years in a row. As of October 10, the stock’s dividend yield came in at 7.60%.
In June, Truist raised its price target on Enterprise Products Partners L.P. (NYSE:EPD) to $30 with a Buy rating on the shares, appreciating the company’s steady revenue growth over the years.
As of the close of Q2 2022, 23 hedge funds tracked by Insider Monkey owned investments in Enterprise Products Partners L.P. (NYSE:EPD), compared with 19 a quarter earlier. These stakes have a combined value of $184.4 million.
Fairholme Capital Management mentioned Enterprise Products Partners L.P. (NYSE:EPD) in its Q2 2022 investor letter. Here is what the firm has to say:
“Enterprise Products Partners L.P. (NYSE:EPD) is the largest position in the Fund. Enterprise provides processing and transportation services to producers and consumers of natural gas, natural gas liquids, and oil. These hydrocarbons are critical for modern life and have few if any, ready substitutes. Commodity prices do not greatly affect the company’s toll road fees. Enterprise is priced at less than nine times distributable cash flows and pays a 7.5% cash distribution.”
3. Coterra Energy Inc. (NYSE:CTRA)
Share Price as of October 10: $29.2
Coterra Energy Inc. (NYSE:CTRA) is an American company that is engaged in the exploration of hydrocarbon. The company’s cash generation makes it well-positioned to deliver superior and sustainable returns to shareholders. In Q2 2022, the company generated $405 million in free cash flow and paid 80% of its FCF to shareholders in dividends. Its operating cash flow for the quarter was $880 million, compared with $245 million during the same period last year.
Coterra Energy Inc. (NYSE:CTRA) maintains a 5-year streak of consistent dividend growth. Over these years, the company has raised its payouts at a CAGR of 32.6%, coming through as one of the best dividend stocks on our list. It pays a quarterly dividend of $0.65 per share and has a dividend yield of 2.05%, as of October 10.
In September, Citigroup raised its price targets on Coterra Energy Inc. (NYSE:CTRA) to $30 and maintained a Neutral rating on the shares. The firm noted that Exploration and Production companies are bouncing back after the pandemic which would lead to multiple expansions and yield compression.
At the end of June 2022, 40 hedge funds in Insider Monkey’s database owned stakes in Coterra Energy Inc. (NYSE:CTRA), up from 39 in the preceding quarter. The collective value of these stakes is over $437.3 million. With over 4.5 million stakes, Diamond Hill Capital was the company’s leading stakeholder in Q2.
Palm Valley Capital Management mentioned Coterra Energy Inc. (NYSE:CTRA) in its Q2 2022 investor letter. Here is what the firm has to say:
“We sold two Fund positions during the quarter which includes Coterra Energy (NYSE:CTRA). As a result of surging oil and natural gas prices, Coterra reached our valuation, and we exited the position in April.”
2. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Share Price as of October 10: $30.5
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is an American-British-Swiss holding company that owns retail pharmacy chains and several pharmaceutical companies. The company holds one of the longest dividend growth track records in the market, having raised its dividends for the past 47 years. It pays a quarterly dividend of $0.48 per share for a yield of 6.29%, as of October 10.
In the second quarter of 2022, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) reported strong cash generation. Its operating cash flow stood at over $1.6 billion, compared with $1.2 billion during the same period last year. The company generated $1.3 billion in free cash flow, up from $867 million in the prior-year quarter. It also reported a 2.4% growth in its US comparable sales during the quarter.
In October, Mizuho mentioned Walgreens Boots Alliance, Inc. (NASDAQ:WBA) and highlighted the company’s longer-term growth algorithm. In view of this, the firm maintained its neutral rating on the stock with a $36 price target.
At the end of Q2 2022, 40 hedge funds tracked by Insider Monkey owned stakes in Walgreens Boots Alliance, Inc. (NASDAQ:WBA), up from 38 in the previous quarter. These stakes have a consolidated value of roughly $600 million.
1. Invitation Homes Inc. (NYSE:INVH)
Share Price as of October 10: $32.3
Invitation Homes Inc. (NYSE:INVH) is a Texas-based real estate investment trust company that owns single-family rental homes in the US. In October, Barclays maintained an Overweight rating on the stock with a $41 price target as the single-family rental sector has outperformed this year. The firm also sees more durable rent growth in the sector in late 2022.
Invitation Homes Inc. (NYSE:INVH) has been raising its dividends consistently for the past four years. In the last three years, it raised its payouts at a CAGR of 18%. It currently pays a quarterly dividend of $0.22 per share and has a dividend yield of 2.72%, as of October 10.
The number of hedge funds tracked by Insider Monkey owning stakes in Invitation Homes Inc. (NYSE:INVH) stood at 27 in Q2 2022, falling from 33 in the previous quarter. The total value of these stakes is over $452.4 million. Jeffrey Furber and Israel Englander were the company’s most prominent stakeholders in Q2.
Baron Funds mentioned Invitation Homes Inc. (NYSE:INVH) in its Q2 2022 investor letter. Here is what the firm has to say:
“Single-Family Rental REITs (7.8%): We are bullish about the Fund’s investments in single-family rental REIT Invitation Homes, Inc. (NYSE:INVH). Demand conditions for rental homes are attractive due to a decline in home purchase affordability, the propensity to rent, and the strong desire by households to rent homes in suburbs rather than rent apartments in cities. Regarding new construction activity, there is a limited supply of single-family rental homes in the U.S. housing market, increasingly constrained by rising construction costs. Limited inventory combined with strong demand is leading to robust rent growth. Invitation Homes has an opportunity to partially offset inflation given that in-place annual leases are significantly below market rents. Valuations are compelling at less than $400,000 per home and at 5% capitalization rates.”
You can also take a look at 10 Monthly Dividend Stocks with Over 4% Yield and 11 Best Dividend Paying Stocks Under $50
Follow Insider Monkey on Twitter
Suggested articles:
- 10 Monthly Dividend Stocks with High Yields
- 15 Most Valuable Companies in History
- Best Fitness Stocks To Invest In
Disclosure. None. 10 Dividend Stocks That Are Too Cheap To Ignore is originally published on Insider Monkey.
