In this article, we discuss 12 best dividend stocks under $20. You can skip our detailed analysis of dividend stocks and their performance in the past, and go directly to read 5 Best Dividend Stocks Under $20.
In 2023, dividend-paying stocks faced difficulties, but experienced investors understand that short-term setbacks don't deter them. They know that dividend stocks hold enduring value, a fact repeatedly confirmed by their consistent appeal over time. Reflecting on the last two decades of Bloomberg data, it becomes evident that dividend-paying stocks tended to outperform the Russell 1000 Value index when non-dividend payers underperformed, and vice versa. This pattern occurred approximately 56% of the time, as reported by Sterling Capital. The report also mentioned that during the two-decade span, dividend-paying stocks generally displayed quarterly outperformance more frequently than underperformance, in contrast to non-dividend earners.
While dividend stocks may not have delivered strong results this year, it's worth noting that dividend payments in the US are steadily increasing. According to a report by Janus Henderson, in the third quarter of 2023, common dividend increases in the US amounted to $18.0 billion, marking an 84.0% increase from the $9.8 billion seen in the second quarter of 2023. The report also mentioned that 448 US companies increased their dividends during the quarter. As dividend growth is on the right track, Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, has given a positive outlook for dividend payments this year. Here are some comments from the analyst:
“For Q4 2023, the dollar aggregate of dividends are expected to increase. Absent an economic event, they could even set a dividend payment record for the S&P 500 Q4 period as large caps appear to be weathering the uncertainties better than others. This result would make 2023 the 14th consecutive year of dividend increases for the index, and the 12th consecutive record year. For 2024, we expect companies to remain cautious over both consumer and government spending, and consider any impact of the political environment. This could result in restrained net dividend increases, posting a 3.5%-4.5% increase in actual cash payments for 2024 over 2023.”
Given the present economic conditions, investors are showing a preference for cheap dividend stocks. These stocks often provide higher dividend yields, which can be an attractive source of passive income for investors. Additionally, the lower stock prices mean that you can potentially buy more shares for the same amount of capital, increasing the overall dividend income. McDonald’s Corporation (NYSE:MCD), The Procter & Gamble Company (NYSE:PG), and Merck & Co., Inc. (NYSE:MRK) are some of the most popular dividend stocks due to their consistency in growing their dividends, however, we will discuss some of the best dividend stocks to buy under $20.
12 Best Dividend Stocks Under $20
Our Methodology:
We scanned Insider Monkey’s database of 910 hedge funds and picked 12 dividend stocks priced under $20 as of October 30. We preferred companies with stable dividend histories. The stocks are ranked in ascending order of the number of hedge funds having stakes in them as of Q2 2023.
BRT Apartments Corp. (NYSE:BRT) is an American real estate investment trust company that primarily focuses on owning, operating, and developing multi-family properties. In the second quarter of 2023, the company reported revenue of $23.3 million, which showed a 58.7% growth from the same period last year. It ended the quarter with over $31.3 million available in cash and cash equivalents and its total assets amounted to $727.8 million.
BRT Apartments Corp. (NYSE:BRT) has been growing its dividends for two consecutive years. The company pays a quarterly dividend of $0.25 per share and has a dividend yield of 6.13%, as of October 30. It can be added to dividend portfolios alongside McDonald’s Corporation (NYSE:MCD), The Procter & Gamble Company (NYSE:PG), and Merck & Co., Inc. (NYSE:MRK).
At the end of Q2 2023, 4 hedge funds in Insider Monkey's database reported having stakes in BRT Apartments Corp. (NYSE:BRT), up from 3 in the previous quarter. The consolidated value of these stakes is over $3.8 million.
Farmers National Banc Corp. (NASDAQ:FMNB) is an Ohio-based bank holding company that focuses on providing banking and financial services to individuals, businesses, and communities. The company currently pays a quarterly dividend of $0.17 per share, having raised it by 6% last year. The company has been growing its dividends consistently for the past seven years, which makes FMNB one of the best dividend stocks on our list. The stock has a dividend yield of 6.13%, as of October 30.
As of the end of Q2 2023, 4 hedge funds in Insider Monkey's database reported having stakes in Farmers National Banc Corp. (NASDAQ:FMNB), compared with 7 in the previous quarter. The consolidated value of these stakes is more than $1.5 million. Among these hedge funds, Two Sigma Advisors was the company's leading stakeholder in Q2.
TFS Financial Corporation (NASDAQ:TFSL) is an American bank holding company that specializes in residential mortgage lending, providing mortgage loans to individuals and families for the purchase or refinance of homes. In its recently announced third-quarter earnings, the company posted revenue of $75.4 million, which fell by 5.5% from the same period last year. At the end of the quarter, it had over $466.7 million available in cash and cash equivalents, up from $370 million in the prior-year period.
TFS Financial Corporation (NASDAQ:TFSL) has been making regular dividend payments to shareholders for the past nine years. The company currently pays a quarterly dividend of $0.2825 per share and has a dividend yield of 9.67%, as recorded on October 30.
As of the end of the second quarter of 2023, 6 hedge funds in Insider Monkey's database reported having investments in TFS Financial Corporation (NASDAQ:TFSL), up from 5 in the previous quarter. These stakes have a collective value of over $13.3 million.
Star Group, L.P. (NYSE:SGU) is an American energy company that primarily operates in the propane distribution and related services industry. The company provides a range of energy-related products and services, with a focus on propane and heating oil. It is one of the best dividend stocks on our list as the company has been paying uninterrupted dividends to shareholders since 1996. The company offers a quarterly dividend of $0.1625 per share for a dividend yield of 5.63%, as of October 30.
The number of hedge funds in Insider Monkey's database owning stakes in Star Group, L.P. (NYSE:SGU) stood at 7 in Q2 2023, the same as in the previous quarter. The consolidated value of these stakes is more than $50 million. With over 3.4 million shares, Bandera Partners was the company's leading stakeholder in Q2.
Northwest Bancshares, Inc. (NASDAQ:NWBI) is a financial holding company that engages in various financial and banking activities. These services include checking and savings accounts, certificates of deposit (CDs), personal loans, and other deposit and lending products.
In the third quarter of 2023, Northwest Bancshares, Inc. (NASDAQ:NWBI) reported revenue of roughly $140 million, which beat analysts' consensus by $5.8 million. At the end of the quarter, the company's cash and cash equivalents amounted to nearly $162 million, up from $118.5 million in the prior-year period.
Northwest Bancshares, Inc. (NASDAQ:NWBI) is one of the best dividend stocks on our list as the company has been paying regular dividends to shareholders for the past 116 quarters. The company's quarterly dividend currently stands at $0.20 per share and has a dividend yield of 7.68%, as of October 30.
At the end of June 2023, 11 hedge funds tracked by Insider Monkey owned stakes in Northwest Bancshares, Inc. (NASDAQ:NWBI), compared with 12 in the previous quarter. The total value of these stakes is over $7.4 million.
Hercules Capital, Inc. (NYSE:HTGC) is an American specialty finance company, based in California. The primary focus of the company is to provide financing solutions and venture debt to technology and life sciences companies, particularly those in the early and growth stages. The company currently pays a quarterly dividend of $0.40 per share, growing it by 2.6% in August this year. This marked the company's fifth consecutive year of dividend growth, which makes HTGC one of the best dividend stocks on our list.
According to Insider Monkey's database of Q2 2023, the number of hedge funds holding stakes in Hercules Capital, Inc. (NYSE:HTGC) grew to 12, from 9 in the previous quarter. These stakes have a total value of roughly $30 million. Two Sigma Advisors was the company's leading stakeholder in Q2.
An American real estate investment trust company, Arbor Realty Trust, Inc. (NYSE:ABR) is next on our list of the best dividend stocks under $20. The company has raised its dividends for 11 years straight and currently pays a quarterly dividend of $0.43 per share. The stock's dividend yield on October 30 came in at 13.65%.
In addition to some of the best dividend stocks like McDonald’s Corporation (NYSE:MCD), The Procter & Gamble Company (NYSE:PG), and Merck & Co., Inc. (NYSE:MRK), ABR is also grabbing investors' attention.
At the end of Q2 2023, Arbor Realty Trust, Inc. (NYSE:ABR) was a part of 12 hedge fund portfolios, as per Insider Monkey's database. The total value of stakes owned by these hedge funds is over $55 million. With roughly 3.5 million shares, Omega Advisors was the company's largest stakeholder in Q2.