7 Cheap Dividend Stocks to Buy Now

Income investors might stay away from cheap dividend stocks on concerns that these equities might deliver lower returns than higher-priced ones.

However, if chosen correctly, cheap dividend stocks can generate strong returns as well as their higher-cost peers. Most income investors should include low-priced equities in their investment portfolio to maximize their returns over the extended time horizon.

Some investors might not consider investing into any equities outside of a limited selection of familiar equities. That might be a safe approach that allows equity selection from a list of well-known companies with proven records of delivering solid returns over extended periods. While certainly safe and likely to deliver solid gains, this strategy could underperform even average market growth.

Every portfolio should allocate a portion of the funds into equities with stable asset appreciation and rising dividend income distributions. However, every portfolio should also allocate a small portion of funds for investment into equities that exhibit slightly higher levels of volatility but also offer potentially higher returns.

Individual investors should determine how large of a share to allocate to these alternative investments based on their individual risk affinity or aversion. Additionally, Investors must consider the investment portfolio’s specific goals and strategies over the long term and the short term.

Selecting Equities

To search for new investment opportunities, investors should start with a clean slate and first identify a few basic criteria. Using their favorite investment analysis tool — like the Dividend Screener available at DividendInvestor.com — investors can tweak and tighten their specific requirements until a list of only few potential equities remains. After narrowing the list of potential equities to a handful of promising contenders, the manual research of the remaining options becomes manageable.

After filtering all the available equities through multiple steps of general and specific criteria, the list below contains seven cheap dividend stocks that might have the potential to deliver robust dividend income and total returns, at least over the near term. The equities on the list below have market capitalizations of at least $4 billion, dividend increases for at least the last two years, dividend yields of more than 2% and positive total returns over the past 12 months and three years. Lastly, the share prices of equities had to be below $30 at the end of trading on April 11, 2019.

The seven cheap dividend stocks to buy now on the list below are sorted by their closing price in descending order.

7 Cheap Dividend Stocks to Buy Now: #7

Enterprise Products Partners L.P. (NYSE:EPD)

Market Cap: $63.56 billion

Sector: Energy

First Dividend Paid: 1998

Consecutive Annual Dividend Hikes: 20 years

Dividend Frequency: Quarterly

12-Month Total Return: 24.1%

Three-Year Total Return: 42%

April 11, 2019, Closing Price: $29.33

Dividend Yield: 6.02%

The share price advanced nearly 50% over the past five years. Additionally, the share price posted one-year gains of nearly 14% despite being nearly 10% below the April 2018 level as recently as end of December. The company boosted its quarterly payout from $0.435 to $0.438 for the next round of dividend distributions on the May 13, pay date, to all shareholders of record prior to the April 29, 2019, ex-dividend date.

7 Cheap Dividend Stocks to Buy Now: #6

H & R Block, Inc.  (NYSE:HRB)

Market Cap: $5.10 billion

Sector: Services

First Dividend Paid: 1962

Consecutive Annual Dividend Hikes: 4 years

Dividend Frequency: Quarterly

12-Month Total Return: 1.12%

Three-Year Total Return: 15%

April 11, 2019, Closing Price: $25.23

Dividend Yield: 3.99%

In addition to hiking its annual dividend over the past four years, the company also boosted its dividend payout in 15 out of the past 20 years and managed to avoid dividend cuts all together. The company’s current 31% dividend payout ratio is nearly half the 59% five-year average and indicates that the company’s earnings are more than sufficient to cover future dividend distributions and dividend hikes. Since losing 43% of its value in 2016, the share price has gained 28%.

7 Cheap Dividend Stocks to Buy Now: #5

RELX PLC  (NYSE:RELX)

Market Cap: $5.91 billion

Sector: Industrials

First Dividend Paid: 2008

Consecutive Annual Dividend Hikes: 3 years

Dividend Frequency: Semiannually

12-Month Total Return: 2.2%

Three-Year Total Return: 25%

April 11, 2019, Closing Price: $21.74

Dividend Yield: 2.44%

While gaining 5.6% in 2019 and 9.3% over the past six months, the share price advanced more than 30% over the past five years and nearly tripled since late May 2012. The company’s current yield is 14% higher than the average dividend yield of the entire Services sector, as well as more than 42% above the 1.53% average yield of the simple average yield of the Business Services industry segment.

7 Cheap Dividend Stocks to Buy Now: #4

Brookfield Property Partners LP  (NYSE:BPY)

Market Cap: $5.49 billion

Sector: Financials

First Dividend Paid: 2013

Consecutive Annual Dividend Hikes: 5 years

Dividend Frequency: Quarterly

12-Month Total Return: 17.9%

Three-Year Total Return: 8%

April 11, 2019, Closing Price: $21.15

Dividend Yield: 6.26%

With the highest dividend yield on this list, BPY enhanced its quarterly dividend nearly 5% from $0.315 to $0.33 for its most recent round of distributions at the end of March 2019. Over the past five years, the company enhanced its total annual payout amount nearly 75%, which corresponds to an average growth rate of 7.8% per year. While delivering only a single-digit-percentage total return over the past three years, the company delivered a total return of more than 40% over the past five years.

7 Cheap Dividend Stocks to Buy Now: #3

Old Republic International Corporation  (NYSE:ORI)

Market Cap: $6.35 billion

Sector: Financials

First Dividend Paid: 1942

Consecutive Annual Dividend Hikes: 20 years

Dividend Frequency: Quarterly

12-Month Total Return: 1.9%

Three-Year Total Return: 35%

April 11, 2019, Closing Price: $21.04

Dividend Yield: 3.82%

The company boosted its quarterly dividend distribution 2.6% from $0.195 in the previous period to the $0.20 payout amount for its March 15, 2019, pay date. Over the past two decades, the company more-than tripled its total annual dividend payout, which corresponds to an average annual growth rate of nearly 6%. The combined total return from asset appreciation and dividend income over the past five years was more than 60%.

7 Cheap Dividend Stocks to Buy Now: #2

The Wendy’s Company  (NYSE:WEN)

Market Cap: $4.14 billion

Sector: Services

First Dividend Paid: 1976

Consecutive Annual Dividend Hikes: 10 years

Dividend Frequency: Quarterly

12-Month Total Return: 7.3%

Three-Year Total Return: 72%

April 11, 2019, Closing Price: $18.39

Dividend Yield: 2.22%

Wendy’s hiked its quarterly payout 17.6% from $0.085 to $0.10 for its most recent pay date in mid-March 2019. Since resuming its dividend boosts streak in 2010, the company enhanced its annual payout more than 50% which is equivalent 4.4% average annual growth rate. Annual dividends rose even faster more recently with a 13.4% average growth rate over the past five years and more than 15.6% over the past three years. The company’s shareholders more-than doubled their investment with a total return of 121% over the past five years.

7 Cheap Dividend Stocks to Buy Now: #1

Infosys Ltd. (NYSE:INFY)

Market Cap: $46.93 billion

Sector: IT & Communications

First Dividend Paid: 1999

Consecutive Annual Dividend Hikes: 2 years

Dividend Frequency: Quarterly

12-Month Total Return: 32.2%

Three-Year Total Return: 31%

April 11, 2019, Closing Price: $10.97

Dividend Yield: 2.1%

While seemingly cutting its annual dividend every other year for two decades, the company generally follow a dividend cut with an increase above the previous dividend amount peak. Despite the seemingly erratic dividend distributions, the company enhanced its total annual payout amount more than 11-fold over the past two decades. This level of dividend advancement is equivalent to a 13% average annnual growth rate. Furthermore, the compny’s current 2.1% yield is 125% higher than the 0.93% average yield of the entire Technology sector. Also, INFY’s current yield is the second highest in the Business Software & Services industry segment and more than 175% above the segment’s simple average yield of 0.76%.

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