All excellent stock investments can reward their owners by increasing in value over time, but in order to reap the benefits, you must sell some of your holding. That is not the case with dividend stocks, which pay out regular dividends to shareholders, which they can spend as income or reinvest directly back into their portfolios without selling a single share.
Dividend-paying corporations are often large, stable, and well-established. Typically, they can pay dividends because they are so safe and well-off that they can fund their operations, growth, and expansion while still having money to contribute to their shareholders.
Another advantage of this investment class is that the cliche “you get what you pay for” does not necessarily apply – many of the top dividend stocks are also inexpensive dividend stocks.
Keep reading to discover about some of the most cheapest income-generating equity investments — dubbed cheap dividend stocks — that you can find on the market today.
Which Dividend Stocks Should You Buy Right Now?
As you’ll see, the best dividend companies aren’t always the ones with the highest dividend yields. The best dividend equities are those given by stable, well-managed corporations with sound balance sheets.
Dividend investing is no different than any other type of equity investing in this regard. The goal is to target organisations that are in good form, offer value-added products or services, and are managed for long-term growth and stability.
What are the cheapest dividend-paying stocks?
The following are ten stocks that, despite their low prices, pay out large dividends to their stockholders.
Even the most expensive stock on the list is now trading for less than $36 per share, with the majority trading in the single digits. The lowest dividend yield is 2.62%, which is still much higher than the S&P 500 average of 1.69%, but the majority are far higher, with three reaching double digits.
1. Annaly Capital Management Inc. is the first company on the list (NLY)
- Price of stock: $6.45
- 13.64% dividend yield
Annaly Capital Management finances and invests in both residential and commercial developments through different investment organisations. It also invests in agency mortgage-backed securities.
2. University of Wisconsin-Madison Holdings Corp. (UWMC)
- $3.62 per share
- 11.05% dividend yield
For seven years in a row, United Wholesale Mortgage has been the largest wholesale mortgage lender in America by origination.
3. Hanesbrands (HBI) (HBI)
- Price of stock: $8.71
- 6.89% dividend yield
Hanesbrands, one of the world’s most well-known consumer products firms, works in three segments: innerwear, activewear, and international.
4. Prospect Capital Corporation (PSEC)
- $7.48 per share
- 9.63% dividend yield
Prospect Capital Corp. is a business development firm that invests in Canadian and American middle-market companies, primarily in media, health care, food, financial services, business services, energy, industrials, and manufacturing.
5. Partners in Enterprise Products (EPD)
- $26.32 per share
- 7.22% dividend yield
Enterprise Products Partners is a holding company that trades and manufactures natural gas and petrochemicals.
6. Chimera Investment Corporation (CIM)
- Price of stock: $8.50
- 15.53% dividend yield
Chimera, a real estate investment trust, invests in mortgage assets directly as well as through a network of subsidiaries. Residential and commercial mortgage loans, mortgage-backed securities, and other real estate assets are included in its portfolio.
7. Equitrans Midstream Corporation (ETRN)
- $9.27 per share
- 6.47% dividend yield
Equitrans Midstream Corp, one of America’s largest natural gas gathering businesses, has a significant presence in the Appalachian Basin. It is divided into three major segments: gathering, transmission, and water.
8. Yamana Gold, Inc. (AUY)
- $4.41 per share
- 2.72% dividend yield
Yamana is involved in gold and other precious metal mining, exploration, extraction, reclamation, processing, and other related activities.
9. Walgreens Boots Alliance Incorporated (WBA)
- Price of stock: $35.06
- 5.48% dividend yield
Walgreens Boots Alliance, founded in 1901, operates health, beauty, and pharmacy retail franchises around the world. Its drug stores are known as Walgreens and Duane Reade in the United States.
10. AT&T (T)
- $17.54 per share
- 6.33% dividend yield
AT&T is a telecommunications, media, and technology conglomerate that works in four segments: Communications, WarnerMedia, Latin America, and Xandr.
Can Dividends Make You Rich?
Investing in growth stocks, which have the potential for rapid and dramatic appreciation, is more likely to make you wealthy than chasing the biggest yields.
Large technology companies, for example, often do not pay dividends since they reinvest all available capital back into the company in order to grow as quickly as possible. When successful, fast stock appreciation occurs, making stockholders wealthy along the way.
Dividend investors, on the other hand, seek consistent, predictable income over time.
Contrary to popular belief, the stock with the largest dividend is not always the best dividend investment. When a dividend yield is unnaturally high, it may signal that the company is anxious to attract investors due to financial crisis or some other type of trouble.
Even the most well-known companies may struggle to pay out large dividends over time, which is why it’s critical to investigate indicators such as free cash flow and the historical dividend payout ratio of any dividend stock you’re considering.
Stocks with low quality and high yield are frequently the modern counterpart of fool’s gold.
How Can I Earn $5,000 in Dividends Every Month?
To earn $5,000 in dividends every month, you’d have to earn a 10% monthly dividend on $50,000 in shares, a 1% dividend on $500,000, a 0.1% dividend on $5 million, and so on – but there’s more to it than that.
Most businesses pay dividends quarterly rather than monthly.
Divide the quarterly dividend payment – the money amount, not the yield % — by three to get a company’s monthly dividend payment, according to PocketSense. For example, if a corporation pays a $0.30 per share quarterly dividend, the monthly dividend is $0.10 per share. Simply multiply your way up to $5,000 from there.
In this scenario, 50,000 shares are required to earn $5,000 per month in dividends on a stock that pays $0.30 per share, quarterly.
You Should Be Aware
If you notice a terrific dividend stock that you like but have to save up until you can afford a share that is out of your price range, it may be time to reconsider your present brokerage business.
Many of the largest brokerage firms, such as Charles Schwab, Fidelity, and M1 Finance, have free investment accounts that allow customers to invest in partial shares. The structure, also known as fractional-share investing, allows you to invest in whatever company you want with any amount of money you have.
Not only do you not have to wait until you have saved enough money to buy a complete share, but partial-share investing allows you to diversify your holdings by purchasing a little portion of several stocks, regardless of their share price.
For example, if you have $100 to invest, you can divide it into ten $10 investments in ten different stocks — or five $5 investments in twenty firms — or any other ratio you want, even if each stock costs hundreds of dollars per share.
You’ve just heard about some of the most affordable dividend stocks, but with partial-share investment, any stock may be considered affordable.