We recently published a list of 10 Best Dividend Stocks Under $5. In this article, we are going to take a look at where Crown Crafts, Inc. (NASDAQ:CRWS) stands against the other dividend stocks under $5.
Dividends have consistently been a strong source of returns over time. These stocks hold both theoretical and practical significance in assessing stock values. Although dividend stocks have underperformed the broader market in recent years, their long-term performance remains steady.
Since the beginning of 2024, the Dividend Aristocrats Index—which monitors companies that have consistently raised their dividends for at least 25 consecutive years—has yielded returns of over 8% for investors. However, this performance has fallen short compared to the broader market, which has surged by nearly 19% during the same period. Despite this shortfall, 2024 has been a favorable year for dividends overall. This improvement is largely attributable to several major technology firms, previously known for not paying dividends, announcing the start of their dividend programs. Moreover, these companies have collectively distributed billions in their inaugural dividend payments.
The long-term performance of dividend stocks also takes into account periods of high interest rates, during which other asset classes typically experience declines. This doesn’t imply that dividend stocks only perform well during episodes of high interest rates. While there isn’t a clear connection between their performance and interest rates, historical data shows that they tend to remain relatively stable regardless of the rate environment. For instance, in certain periods of rising US interest rates, such as the mid-1970s, dividend-paying stocks outperformed the broader market. Conversely, as rates decreased from the mid-1980s to the mid-1990s, the performance of high-yield stocks relative to the market remained relatively stable. Even if we set aside historical data and concentrate on more recent performance, we find that elevated interest rates did not have any serious impact on the performance of dividend equities. For example, in 2022, when the Federal Reserve raised its federal funds rate seven times to tackle persistent inflation—four of which were consecutive hikes of 75 basis points—dividend stocks outperformed the broader market. This could be due to the fact that dividend-paying companies tend to be well-established and more stable, with enough confidence in their cash flows to commit to returning cash to shareholders. Moreover, committing to a dividend imposes financial discipline. Instead of using excess cash for acquisitions that may or may not create value, repurchasing shares at uncertain prices, or funding speculative growth initiatives, executives are compelled to manage payouts responsibly.
Given investors’ growing interest in dividend stocks, more companies are initiating and increasing their dividend payments. A key driver behind this trend is that many companies, particularly large tech firms, have substantial cash reserves and are rapidly boosting their free cash flows. This strong financial footing allows them to reward investors with higher dividends. According to the latest report from S&P Dow Jones Indices, companies in the index paid $153.4 billion in dividends during the second quarter of 2024, up from $151.6 billion in the previous quarter and $143.2 billion in the same period last year. The report also highlighted that there were 539 dividend increases reported, compared to 460 in the same period last year, marking a 17.2% year-over-year growth. The total amount of these increases reached $20.4 billion for the quarter, up significantly from $9.8 billion in Q2 2023. With that, we will take a look at some of the best dividend stocks under $5.
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Is Crown Crafts, Inc. (CRWS) The Best Dividend Stock Under $5?
A baby sleeping peacefully with a swaddle blanket and nursery accessories.
Crown Crafts, Inc. (NASDAQ:CRWS) is an American company that specializes in infant, toddler, and juvenile consumer products. The company manufactures developmental toys, bedding, and bibs. The stock is down by over 4% this year so far as the company tried to overcome ongoing inflationary pressures. Its fiscal Q1 2025 earnings were also affected by these macroeconomic conditions, which limited consumers’ discretionary income, along with certain non-routine costs that led to a slight loss for the quarter. However, it is encouraged by the performance of its bedding segment. In FY24, the company’s bedding, blankets, and accessories group generated over $32 million in revenue.
Crown Crafts, Inc. (NASDAQ:CRWS) is actively growing its portfolio by acquiring new companies. Its acquisition of Manhattan Toy broadened its distribution channels, and it continues to receive positive feedback on Manhattan Toy’s new product development. The company is also enthusiastic about its recent acquisition of Baby Boom, which strengthens its position in the toddler bedding market and diversifies its product lineup with diaper bags. Baby Boom currently licenses some of the most popular brands, and they anticipate that this acquisition will immediately boost earnings.
Crown Crafts, Inc. (NASDAQ:CRWS), one of the best dividend stocks under $5, has been paying regular dividends to shareholders since 1989, with only a brief pause for one quarter during the pandemic. Over the course of its dividend history, the company has also distributed special dividends to shareholders. In FY24, it returned $3.3 million in dividends to shareholders, up from $3.2 million in FY23. The company pays a quarterly dividend of $0.08 per share and has a dividend yield of 6.72%, as of August 23.
As of the close of Q2 2024, 4 hedge funds in Insider Monkey’s database owned stakes in Crown Crafts, Inc. (NASDAQ:CRWS), up from 3 in the previous quarter. These stakes have a consolidated value of roughly $3 million. Among these hedge funds, Renaissance Technologies was the company’s leading stakeholder in Q2.
Overall CRWS ranks 9th on our list of the best dividend stocks under $5. While we acknowledge the potential for CRWS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CRWS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
