Stock Analysis & Ideas

Cheap Dividends: The Best Dividend Stocks Under $5

Story Highlights

Despite the broader market decline due to macroeconomic problems, certain low-priced dividend stock picks offer long-term portfolio cushioning for investors eager to sidestep looming recessionary concerns. 

This year, the stock market has presented itself with some questionable challenges, leading investors to park their cash in low-risk and high-return assets as a central bank-induced recession is looking to make landfall in mid-2023, according to Deutsche Bank (NYSE:DB) researchers. Against the backdrop of broader macroeconomic problems, the tension between Russia and Ukraine and unrest in China (COVID-19 protests) have weighed on markets.

Dividend stocks have surpassed the broader market, and according to CIBC Asset Management, the return of dividend stocks with reinvestments had a return of 10.62% over the last 15 years ending August 2021. Here’s a look at some interesting and cheap dividend stocks available for less than $5/share. 

B2Gold Corporation (NYSEARCA: BTG)

During its Q2 earnings, B2Gold Corp reported continued gold production of 223,623 ounces. Though small in comparison to other major gold mining conglomerates, the Canadian-based gold mining company owns and operates several mines in Mali, Namibia, and the Philippines. 

So far this year, the company has kept a steady spreadsheet, ensuring it remains below budget as it manages to offset inflation-driven production and manufacturing costs. BTG has slumped a bit, down 4.3% year-to-date, and the stock currently yields 4.6%.

Is BTG Stock a Buy, According to Analysts?

Turning to Wall Street, BTG has a Strong Buy consensus rating based on seven Buys and one Hold assigned in the past three months. The average BTG price target of $5.81 implies 63.2% upside potential.

Diversified Healthcare Trust (NASDAQ: DHC)

For what it’s worth, Diversified Healthcare Trust has a steady performance record, as the company owns and operates high-quality healthcare facilities and properties across 36 states in the U.S. 

The company experienced a challenging Q3, with operating costs increasing by more than $4.1 million due to inflation, higher wages, and Hurricane Ian. However, it still managed to grow its net income year-over-year by just under 9%. Currently, DHC is trading at about $1, but shares do come with a ~4% dividend yield, and experts are hopeful that the company will raise its dividends in the coming years as it navigates recessionary conditions. 

Is DHC Stock a Buy, According to Analysts?

According to analysts, DHC has a Moderate Buy consensus rating based on one Buy and one Hold assigned in the past three months. The average DHC price target of $4.50 implies a whopping 345% upside potential.

New York Mortgage Trust (NASDAQ: NYMT)

Despite challenging real estate market conditions, New York Mortgage Trust has kept a steady and healthy balance sheet this year. Overall, the company is steadily improving from the recent downturn in the housing market as it looks for innovative strategies to navigate the upcoming year. 

NYMT shares have a dividend yield of 14.4%, and the stock is currently trading at just below $3. Going forward, the company is hoping to see its fixed income increase, as it has managed to deliver stable distributions to shareholders over the last few years. 

Is NYMT Stock a Buy, According to Analysts?

Turning to Wall Street, NYMT has a Moderate Buy consensus rating based on three Buys and two Holds assigned in the past three months. The average NYMT price target of $3.63 implies 26% upside potential.

Kinross Gold Corporation (NYSE: KGC)

Kinross, a gold producer, entered 2022 on a high note, only to see share prices drop during the middle half of the year. In recent months, share prices have steadily been climbing again, making sudden improvements in late September after the company announced that it’s looking to boost its share buybacks over the next few years. 

Its dividend yield is currently standing at 3%, with reported earnings of $82.3 million and adjusted earnings of $70.6 million. For much of the year, the company has been able to increase its production, even as costs increased, and it managed to divest much of its Russian assets, which weren’t included in its recent earnings call. 

Is KGC Stock a Buy, According to Analysts?

Turning to Wall Street, KGC has a Strong Buy consensus rating based on six Buys and two Holds assigned in the past three months. The average KGC price target of $5.32 implies 21.5% upside potential.

Aegon N.V. (NYSE: AEG)

The Dutch-owned multinational life insurance, pensions, and asset management company, Aegon N.V., has enjoyed a positive 2022, with shares up 2%. 

So far, the company has kept a steady balance sheet throughout the year, seeing cash and short-term investments jump by 8.7% year-over-year. AEG’s shareholders enjoy a 4.2% dividend yield, with share prices trading just below $5. While there have been some persisting challenges, overall guidance going forward is looking relatively positive. 

Is AEG Stock a Buy, According to Analysts?

Turning to Wall Street, AEG has a Moderate Buy consensus rating based on just one Buy rating assigned in the past three months. AEG’s price target of $5.47 implies 10.95% upside potential.

The Bottom Line 

With so much volatility in the market, investors are seeking low-risk investments that can provide promising yet healthy returns at a low price tag. Although these stocks won’t completely plump up portfolio performance, they should deliver a steady return over the long term and help cushion investors’ sentiment heading into a market turndown. 

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