Top Dividend Stocks Under $20

Top Dividend Stocks Under $20

Dividend stocks can generate passive income and long-term growth. With stock prices elevated lately, many quality names now exceed $100, $200 or even higher per share. This puts them out of reach for smaller investors. The good news is great dividend opportunities exist without breaking the bank. Many fundamentally sound companies trade under the $20 price mark.

Focusing on cheap dividend stocks does require researching business models and financials more diligently. Lower share prices at times reflect underlying challenges. However, the stocks below combine solid yields over 4% with quality attributes like strong competitive positions, long dividend growth histories and reasonable payout ratios below 60%.

Telecom Leaders with High Yields

The telecom sector is facing disruption but also offers intriguing income options:

AT&T Inc.

The telecom and media giant pays a dividend yield of 6.34%. AT&T retains strong mobile and broadband businesses alongside newer media properties like HBO Max. The stock trades at just 7 times earnings. The yield far exceeds short and long-term interest rates.

Lumen Technologies

Formerly CenturyLink, Lumen sports a dividend yield of 11.13%. The rural and enterprise telecom delivers essential fiber internet and network services. Efforts to expand higher-margin products support a distribution exceeding earnings. The high yield and $12 share price limit downside risk.

Energy Stocks with Big Dividends

Energy stocks have lagged lately but still offer income upside:

Enterprise Products Partners

Oil pipelines and storage facilities power this partnership’s 7.34% distribution rate. Demand for gas, oil and petrochemical transport underpins consistent payouts. The company expects to raise the distribution 2-3% annually without issue. Energy’s volatility lets investors lock this yield in at an inexpensive valuation.

TC Pipelines

Natural gas pipelines drive TC Pipeline’s 8.12% yield. Contracted pipeline capacity ensures reliable income to support distributions. Management targets 8-10% annual DPU growth while the stock trades at only 8 times DCF. TC ties payouts to financial results offering both safety and growth.

Top Property and Real Estate Stocks

Real estate dividends diversify equity income streams:

STAG Industrial

STAG acquires and manages single-tenant industrial buildings, powering a 4.55% dividend. Online shopping tailwinds and warehouse demand boost occupancy and rental rate growth. Funds from operations cover distributions fairly comfortably at reasonable ratios for a property REIT.

EPR Properties

This REIT owns specialized entertainment and recreation properties like movie theaters, ski resorts and golf complexes. A 7.94% dividend highlights EPR’s focus on shareholder returns. Investors buying near $15 get paid well to wait for a rebound in out-of-home leisure spending over time.

Rare Tech Dividends

Tech stocks usually pour cash into growth rather than dividends. A few exceptions exist:

IBM

A tech sector pioneer, IBM has increased dividends annually for 27 straight years. Switching to hybrid cloud solutions stabilized revenue declines. Red Hat acquisition synergies, AI leadership and mainframe upgrades support the 5.43% yield’s sustainability. The stock trades at only 12 times earnings after customers accelerate digital shifts.

Seagate Technology

This hardware company pays a dividend yield of 4.89%. Seagate is the largest manufacturer of hard disk drives for cloud data centers. Renewed enterprise IT investment bolsters cash generation alongside increasing consumer appetite for storage. Management emphasizes balancing payouts with investing to expand capacity.

Top Consumer Defensive Dividend Stocks

Companies producing essential consumer staples boast long dividend growth track records:

Altria

The tobacco giant Altria pays a crazy 8.04% yield. Cigarettes face decline but price hikes support profits. IQOS heated tobacco product and marijuana derivatives offer fresh growth runways long-term. Expect high-single digit EPS and dividend growth supported by Altria’s premium brands and pricing power.

Coca-Cola

Coca-Cola is widely considered one of the most reliable dividend stocks on earth. The company has paid dividends since 1893 and raised them annually for 59 straight years. The iconic beverage company boasts unrivaled distribution scale, brand equity and operating leverage. Investors enjoy an inflation-beating yield over 3% with more growth on tap.

Top Utility Dividend Stocks

Utilities earn geographic monopolies providing essential services. These hardy dividend payers include:

Pinnacle West

The holding company for Arizona Public Service electric utility has increased dividends for 10 consecutive years. Operating in a fast-growing state supports rate base expansion. Pinnacle West stock yields 4.7% at below $70 per share. Earnings easily cover the distribution enabling healthy future hikes.

PPL Corporation

Serving over 10 million customers across two continents, PPL maintains a forward dividend yield around 4%. The company aims to deliver near the high end of 4-6% annual payout growth going forward backed by rate base investments. Consistent financial execution supports sustainable dividends.

Top Pharmaceutical Dividends

Leading drug makers combine dividends and growth:

Johnson & Johnson

Johnson & Johnson boasts a dividend aristocrat status with 60 straight annual increases and a 2.5% yield. JNJ possesses as diversified a business model as exists led by pharmaceuticals and medical devices – both poised to benefit from aging population trends.

Organon

This spin off from Merck started trading in 2021 but already supports a 3.43% dividend. Women’s health, biosimilars and established brands in growth markets create moaty cash flows to fund ongoing payouts. Organon used proceeds to pay down debt, bolstering dividend coverage ratios.

Top Canadian Bank Dividends

Canada’s concentrated oligopoly banking sector reliably pays 4-6% yields. Top picks include:

Bank of Nova Scotia

BNS or Scotia rewards shareholders with a tasty 5.11% dividend yield at recent prices below $70. Exposure across North and South American drives consistent growth to support expanding payouts. The bank looks to deliver through-the-cycle raises averaging 5% annually – an impressive pace for a major financial.

Canadian Imperial Bank of Commerce

CIBC offers investors a similar 5% dividend yield backed by a medium risk profile relative to other Canadian banks. The lender aims to return 40-50% of earnings to owners via dividends and buybacks giving CIBC among the more aggressive capital return policies domestically.

Final Thoughts

The stocks above highlight how even with a $20 and under share price constraint, investors can construct diversified, high yield portfolios suited to generating passive income streams. Always assess company outlooks and financial health individually while averaging into new positions over time. Reinvesting dividends from cheap reliable payers turbocharges compounding.

Conclusion

Cheap or even “bargain” stocks don’t automatically translate to value without assessing company fundamentals and dividend safety. However, share prices under $20 do open quality dividend opportunities meeting yield, growth and quality criteria for multiple sectors. Constructing a diverse basket combining telecom, utility, energy, consumer defensive and other high-yield payers enables passive income investors to maximize cash flows today and total returns over time.

FAQs

What is considered a high dividend yield stock?

High dividend yields vary based on the market environment and sector, but yields around 4-6% generally qualify as strong payouts worth a closer look. Yields above 8-10% require scrutiny to gauge dividend safety and coverage. Any yield substantially exceeding the market average warrants further analysis.

How often do dividend stocks pay dividends?

Most common dividend frequencies include quarterly payments (once every 3 months), semi-annual payments (twice a year) and monthly dividends (12x a year). Annual dividend stocks exist but don’t provide regular income. Investors can choose stocks aligning with their income needs.

What is the lowest price dividend stock?

There is no definitive lowest priced dividend stock, as share prices constantly fluctuate across the thousands of stocks trading on major exchanges. However, some of today’s cheapest dividend payers with strong yields include Lumen Technologies under $6 per share, Altria under $50, and TC Pipelines under $15.

How do I choose dividend stocks for my portfolio?

Key criteria for selecting quality dividend stocks include consistent profitability to fund payouts, moderate dividend payout ratios below 60%, a track record of periodic dividend increases, and a sustainable competitive advantage in its industry. Assessing financial strength and valuation matters too.

What dividend yield is considered safe?

There is no uniform safe dividend yield threshold fitting every stock. As a very general guide, yields up to 4% tend to signal reliability among mature companies, 4-6% signifies above-average yields that may require deeper analysis, while yields over 8% could indicate heightened risk of cuts absent careful assessment.