Investing in high-dividend stocks can be a smart strategy for building a steady income stream. However, identifying low-priced dividend stocks with high dividends is often challenging. In this article, Traders Union delivers expert insights and recommendations to uncover some of the top cheap stocks to consider for 2024.
Top cheap dividend stocks for 2024
Several low priced dividend stocks are gaining attention for their attractive dividend yields and growth potential this year. Traders Union presented the list of the best cheap dividend stocks below.
AT&T (T): a telecommunications giant that offers a dividend yield of 6.99% and an annual dividend of $1.11 per share.
Verizon Communications (VZ): this telecom stock has a forward yield of 7.42%, an annual dividend of $2.66 per share, and a track record of paying dividends for the past 19 years.
Enterprise Products Partners: a leading limited partnership in natural gas and petrochemicals, boasting a 12-month trailing dividend yield of 7.22% and a forward dividend yield of 7.39%.
Avangrid (AGR): an energy services holding corporation with a dividend yield of 5.53% and an annual dividend of $1.76 per share, paid out quarterly.
Franklin Resources (BEN): an asset management holding company with a dividend yield of 5.32% and an annual dividend of $1.20 per share, offering growth potential with forecasted earnings growth of 10.06% per year.
Remarkably, these stocks present profitable opportunities for investors looking to build a diverse portfolio with dividends under $40.
Key considerations for cheap dividend stocks
Dividend stocks are an appealing investment option for many investors seeking a regular income. These stocks, issued by companies that distribute a portion of their earnings to shareholders, can be enticing when priced under $40. However, several key factors should be considered before investing in dividend stocks in this price range.
Financial Health Evaluation: Assess the company’s revenue, expenses, and cash flow to ensure it can sustain dividend payments.
Dividend History Examination: Examine the firm’s history of dividend payments to gauge its commitment to shareholders.
Growth Prospects Assessment: Consider the company’s growth prospects, looking for consistent dividend payments and revenue growth.
Average Dividend Yield Calculation: Calculate the average dividend yield to estimate the annual return on investment.
Diversified Portfolio Addition: Recognize that dividend stocks under $40 can enhance a diversified investment portfolio.
Diversify the portfolio: investment types
In addition to dividend stocks, it is essential for investors to consider diversifying their portfolios across various types of investments. Here are the main types of investment to consider:
Real investments. These include real estate purchases, financing businesses, renovating buildings, and registering trademarks or patents. These assets contribute to the real economy.
Financial investments. This category includes purchasing securities, bank deposits, buying precious metals, and other financial instruments.
Speculative investing. Involves purchasing assets like stocks, bonds, commodities, currencies, and cryptocurrencies, with the expectation of future price increases.
Venture Capital investments. Often used by larger investors to support startups, these investments can be highly profitable but carry significant risk.
Portfolio investments. Suitable for both organizations and private investors, this involves allocating funds across different assets with varying risk levels, such as bonds, stocks, and high-risk instruments like cryptocurrencies.
Intellectual investments. Aimed at creating and protecting intellectual property, these include investments in new technologies, innovative products, scientific research, and specialist training.
Diversifying across these investment classes can help manage risk and maximize returns in financial markets.
Investments for beginners
For beginners, it is essential to approach investing with a focus on building a solid foundation. Accordingly, this often means beginning with less risky investment vehicles. Here are the recommended investment options for beginners.
Government or corporate bonds. These are low-risk assets that offer regular coupon payments, typically ranging from 3% to 9%, depending on the duration of the loan.
Stocks. Investing in shares of domestic and foreign companies allows traders benefit from the growth in the value of the asset and receive income from dividend payments.
Mutual funds, pension funds, investment funds, and ETFs. Investing in these funds allows traders to become part of an institutional investor organization. This is a good way to diversify a portfolio without having to pick individual stocks.
PAMM accounts and copy trading. For those looking for higher-yield investments, registering a PAMM account and copying transactions of successful traders at large brokerage sites, can be a viable option. However, it is important to carefully research and understand the risks involved in these types of investments.
As mentioned in the TechBullion article, by investment experts at TU, diversified dividend investing involves investing in a range of assets from different market areas. Meanwhile, before buying a cheap dividend stock, be aware of the stock’s ex-dividend date. The ex-dividend date, also known as the ex-date, is an important concept related to dividend payments for stocks.
Investing tips to take note
Investing can be challenging and rewarding, offering the opportunity to build wealth and generate passive income. To help beginners get started on the right foot, here are five essential tips from the Traders Union:
Define investment goals. Before starting investing, it is crucial to clearly define financial objectives. Whether saving for retirement, a home, or simply looking to grow wealth, knowing goals will guide investment decisions.
Pay off high-interest debt. High-interest debt, such as credit card debt, can eat into investment returns. It’s wise to prioritize paying off these debts before starting investing to avoid unnecessary financial strain.
Create a diversified portfolio. Diversification is key to reducing risk in an investment portfolio. Spread investments across different asset classes, such as stocks, bonds, and real estate, to minimize the impact of any one investment underperforming.
Educate yourself. Investing involves risks, and it is essential to educate oneself about the market and investment strategies. Consider taking courses, reading books, and staying updated with financial news to make informed decisions.
Start small and stay consistent. Traders do not need a large sum of money to start investing. Begin with a small amount and regularly contribute to investments over time. This approach can help reduce the impact of market fluctuations.
Final thoughts
In conclusion, investing in cheap stocks with high dividends can be a great strategy for beginners. However, investors need to conduct thorough research and due diligence before investing in any stock.
Investing in cheap stocks with high dividends can be a profitable strategy for investors, especially in the current market environment. By carefully selecting dividend stocks and considering other investment options, investors can build a diversified portfolio that offers both income and growth potential. The article was written by Oleg Tkachenko, a certified investment analyst.