In this article, we discuss 12 best dividend stocks under $25. You can skip our detailed analysis of the market outlook and importance of dividend stocks, and go directly to read 5 Best Dividend Stocks Under $25.
Over the years, various stock market patterns have been observed. What may be effective in one market environment may not yield the same results in another. It is clear from this year's investment trends. Investors are now paying a lot of attention to tech stocks that were overlooked last year, while dividend stocks are not performing that well since the start of 2023. In our previous article titled 11 Best Quality Dividend Stocks to Buy, we mentioned Ned Davis Research’s data, which revealed that non-dividend-paying stocks in the S&P 500 have gained around 18% as of July 1, while dividend stocks have only seen a modest 4% increase. This makes it the weakest first-half performance for dividend-paying stocks compared to non-dividend-paying stocks since 2009.
S&P Dow Jones Indices recently published a report showing that the net changes in dividends for U.S. domestic common stocks rose by $4.3 billion in the second quarter of 2023. This amount is lower than the $9.7 billion increase recorded in the first quarter of 2023. The report also mentioned that during the quarter, 460 companies in the S&P 500 announced dividend increases, down from 555 in the prior-year quarter. The S&P 500's Q2 decline ended a streak of seven consecutive quarters of record dividend payments. Though the outlook of dividend stocks may look gloomy, the lingering concerns about a recession give hope that these stocks could bounce back strongly.
Despite the uncertain economic periods, analysts still believe in dividend stocks due to their potential to provide robust returns. When investing in dividend stocks, it's common advice for investors to prioritize dividend growth stocks to ensure a stable and reliable income. Ford Donohue, a financial advisor at Homrich Berg, gave a positive outlook on dividend growth stocks in his interview with Fortune. Here are some comments from the analyst:
“A diversified portfolio of dividend-growing stocks provides income in the form of dividends that should grow over time to offset the impact of inflation. We also believe that consistent dividend growth is a sign of a sound business model, balance sheet strength, and strong corporate governance, all of which should lead to the growth of the underlying business over time and increase the chances of capital appreciation of a stock.”
Mr. Donohue's statement aligns with the historical performance of dividend stocks, which has shown them serving as a hedge against inflation. We have also reported in our article that during decades with high inflation, dividends accounted for over half of the market's returns. For instance, in the 1940s, 1960s, and 1970s, dividends made up 67%, 44%, and 73% of the market's returns, respectively. In these periods, inflation averaged above 5%, and the total returns were lower than 10%. Moreover, the dividend growth of the companies also surpassed inflation over the years. According to BlackRock's report referred to in our article, from 1971 to 2021, dividends paid by US companies increased by an average of 3.7% per year, whereas inflation grew at an average rate of 2% per year.
Walmart Inc. (NYSE:WMT), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV) are some of the most prominent dividend stocks among investors as they hold decades-long dividend growth track records. Further in this list, we have mentioned some of the best dividend stocks under $25.
12 Best Dividend Stocks Under $25
Pixabay/Public Domain Our Methodology:
For this list, we used a Finviz stock screener to find dividend stocks trading below $25 as of July 17. From the initial list, we selected companies with dividend yields above 2% and a history of regular dividend payments, indicating sustainable dividends. Finally, we narrowed it down to 12 stocks that had the highest number of hedge fund investors, as tracked by Insider Monkey in Q1 2023.
PetMed Express, Inc. (NASDAQ:PETS) is an American company that operates an online pet pharmacy. The company's primary focus is on the sale and distribution of prescription and non-prescription pet medications, as well as other health products and pet supplies.
In fiscal Q4 2023, PetMed Express, Inc. (NASDAQ:PETS) reported revenue of $62.4 million, which fell by 5.5% from the same period last year. However, its operating cash flow for the quarter jumped to $27.8 million, from $18.5 million in the prior-year period. Moreover, the company had over $104 million available in cash and cash equivalents at the end of March 31.
On May 22, PetMed Express, Inc. (NASDAQ:PETS) declared a quarterly dividend of $0.30 per share, which was in line with its previous dividend. The stock has a dividend yield of 8.87% as of July 17. It is among the best dividend stocks under $25 on our list. Other popular dividend stocks among investors include Walmart Inc. (NYSE:WMT), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV).
At the end of Q1 2023, 9 hedge funds tracked by Insider Monkey reported having stakes in PetMed Express, Inc. (NASDAQ:PETS), which remained unchanged from the previous quarter. These stakes have a total value of over $30.4 million. Among these hedge funds, Citadel Investment Group was the company's leading stakeholder in Q1.
Midland States Bancorp, Inc. (NASDAQ:MSBI) is an Illinois-based bank holding company that provides a range of banking products and services to individuals, businesses, and communities. The company is one of the best dividend stocks on our list as it maintains a 23-year streak of consistent dividend growth. It currently pays a quarterly dividend of $0.30 per share and has a dividend yield of 5.59%, as recorded on July 17.
In the first quarter of 2023, Midland States Bancorp, Inc. (NASDAQ:MSBI) reported revenue of $76.2 million, which showed a 5.3% growth from the same period last year. Its net income available to common shareholders amounted to over $19.5 million. The company ended the quarter with over $138.3 million available in cash and cash equivalents.
As of the close of Q1 2023, 9 hedge funds in Insider Monkey's database reported having stakes in Midland States Bancorp, Inc. (NASDAQ:MSBI), down from 10 a quarter earlier. The total value of these stakes is over $10.4 million. Cliff Asness' AQR Capital Management was the company's largest stakeholder in Q1.
Hooker Furnishings Corporation (NASDAQ:HOFT) is an American company that operates in the furniture industry. The company is a designer, marketer, and manufacturer of a wide range of home furnishings.
In fiscal Q1 2024, Hooker Furnishings Corporation's (NASDAQ:HOFT) revenue of $121.8 million fell in line with analysts' estimates. Its cash position for the quarter remained stable as it generated $22.4 million in operating cash flow. Moreover, the company returned $2.4 million to shareholders in dividends, which makes it one of the best dividend stocks on our list.
Hooker Furnishings Corporation (NASDAQ:HOFT) currently pays a quarterly dividend of $0.22 per share, having raised it by 10% in December 2022. This was the company's seventh consecutive year of dividend growth. As of July 17, the company's shares have a yield of 4.39%.
The number of hedge funds tracked by Insider Monkey owning stakes in Hooker Furnishings Corporation (NASDAQ:HOFT) stood at 10 in Q1 2023. The stakes owned by these hedge funds are collectively valued at roughly $42 million.
Kennedy-Wilson Holdings, Inc. (NYSE:KW) is a real estate investment company with a diverse range of activities in the real estate sector. The company operates as a global real estate investment and services firm. In the first quarter of 2023, the company posted revenue of $132.2 million, which showed a 6% growth from the same period last year. It ended the quarter with $23 billion in assets under management.
Kennedy-Wilson Holdings, Inc. (NYSE:KW), one of the best dividend stocks under $25, currently pays a quarterly dividend of $0.24 per share. The stock's dividend yield on July 17 came in at 5.68%.
According to Insider Monkey's database for Q1 2023, 12 hedge funds owned investments in Kennedy-Wilson Holdings, Inc. (NYSE:KW), worth collectively $413.5 million. With over 13.3 million shares, Fairfax Financial Holdings was the company's leading stakeholder in Q1.
Manulife Financial Corporation (NYSE:MFC) is a Canadian insurance and financial services company. The company offers a wide range of financial products and services, catering to individuals, businesses, and institutional clients across various markets worldwide.
Manulife Financial Corporation (NYSE:MFC) is one of the best dividend stocks on our list as it maintains a 10-year streak of consistent dividend growth. The company currently pays a per-share dividend of C$0.365 every quarter for a dividend yield of 5.63%, as of July 17.
Insider Monkey's database for Q1 2023 shows that 15 elite funds presented a bullish stance on Manulife Financial Corporation (NYSE:MFC), up from 10 in the previous quarter. The stakes owned by these hedge funds have a total value of over $151.2 million.
SpartanNash Company (NASDAQ:SPTN) is next on our list of the best dividend stocks under $25. The company specializes in food distribution and operates across various segments of the food industry, offering a comprehensive range of products and services. It also distributes a diverse selection of grocery items and non-food products to retailers.
In the first quarter of 2023, SpartanNash Company (NASDAQ:SPTN) reported revenue of roughly $3 billion, up 5.4% from the same period last year. The company's retail comparable sales also saw a 5.4% year-over-year growth. During the quarter, it also returned $7.8 million to shareholders in dividends.
SpartanNash Company (NASDAQ:SPTN) has been rewarding shareholders with growing dividends for the past 12 years and currently pays a quarterly dividend of $0.215 per share. The stock has a dividend yield of 4.03%, as of July 17.
SpartanNash Company (NASDAQ:SPTN) was a popular stock among hedge funds in Q1 2023, as the number of funds in Insider Monkey's database owning stakes in the company jumped to 16, from 11 in a quarter earlier. Their collective stake value is over $47.5 million.
Atlantica Sustainable Infrastructure plc (NASDAQ:AY) is a UK-based that invests in and operates a diverse portfolio of renewable energy and other sustainable infrastructure projects. The company currently pays a quarterly dividend of $0.445 per share and has a dividend yield of 7.45%, as of July 17. It has been raising its dividends consistently for the past 5 years, which makes it one of the best dividend stocks on our list. It can be added to dividend portfolios alongside famous dividend stocks like Walmart Inc. (NYSE:WMT), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV).
In the first quarter of 2023, Atlantica Sustainable Infrastructure plc (NASDAQ:AY)'s cash available for distribution came in at $61 million, up 12% from the same period last year. Its operating cash flow for the period came in at $41.7 million.
As of the close of Q1 2023, 16 hedge funds tracked by Insider Monkey were bullish on Atlantica Sustainable Infrastructure plc (NASDAQ:AY), up from 15 in the previous quarter. The stakes owned by these funds are collectively worth over $74.6 million. Melqart Asset Management was one of the company's leading stakeholders in Q1.
