Published on March 21st, 2023 by Bob Ciura
Stock prices come in all sizes. A few trade above $1,000 per share, such as Booking Holdings (BKNG) and AutoZone (AZO). Meanwhile, Warren Buffett’s Berkshire Hathaway (BRK.A) currently trades above $400,000 per share.
Most companies do not have such high share prices. When a share price gets very high, many companies will split their stock to lower the share price. In the eyes of some, this makes the stock more approachable for investors who may not have thousands of dollars to invest at a time.
In the same vein, investors can screen for stocks with low share prices. Although, a low share price is not by itself a measure of an investment-worthy company.
In general, we recommend investors who are looking for high-quality dividend growth stocks start with the Dividend Aristocrats. Dividend Aristocrats are elite companies that satisfy the following:
- Are in the S&P 500 Index
- Have 25+ consecutive years of dividend increases
- Meet certain minimum size & liquidity requirements
You can download an Excel spreadsheet with the full list of all 68 Dividend Aristocrats (with additional financial metrics such as price-to-earnings ratios and dividend yields) by clicking the link below:
But for investors who may not have a great deal of capital to deploy in such a high-priced stock as Berkshire, there are some stocks that can be bought for under $5 per share.
This article will discuss our top 7 dividend stocks under $5 with Dividend Risk Scores of ‘D’ or better, and positive expected returns, ranked by expected returns according to the Sure Analysis Research Database.
Table of Contents
- Top Stock Under $5: Banco Bradesco S.A. (BBD)
- Top Stock Under $5: Banco Santander (SAN)
- Top Stock Under $5: U.S. Global Investors (GROW)
- Top Stock Under $5: Industrial Logistics Properties Trust (ILPT)
- Top Stock Under $5: Itau Unibanco (ITUB)
- Top Stock Under $5: Paramount Group (PGRE)
- Top Stock Under $5: Uniti Group (UNIT)
Top Stock Under $5: Banco Bradesco S.A. (BBD)
- 5-year expected annual returns: 2.6%
Banco Bradesco offers various banking products and financial services to individuals, corporations, and businesses in Brazil and internationally. The company’s two main segments are banking and insurance, including checking and savings accounts, demand deposits, time deposits, as well as accident and property insurance products and investment products. The company generates around $20 billion in annual revenues and is headquartered in Osasco, Brazil.
On February 10th, 2023, Banco Bradesco reported its Q4 and full-year results for the period ending December 31st, 2022.
Source: Investor Presentation
The banking segment’s net interest income came in at $3.20 billion for the quarter, representing a 1.7% decline year-over-year. Income from insurance grew by 21.9% to $824.5 million. The significant increase in insurance income was favored by the expansion of revenue in all lines of business and by the increase in financial income.
Recurring net income came in at $0.31 billion, 75.9% lower compared to last year. The main reasons for this result were the performance of the market NII, which was negatively affected by the current level of the Selic (Special System for Settlement and Custody), the increase in expenses caused by the delinquency scenario, and the reinforcement of the complementary ALL (additional coverage provision). EPS for the year came in at $0.37, down from $0.39 in fiscal 2021. We are forecasting FY2023 EPS of $0.38, assuming higher net interest income due to rising interest rates.
Click here to download our most recent Sure Analysis report on BBD (preview of page 1 of 3 shown below):
Top Stock Under $5: Banco Santander S.A. (SAN)
- 5-year expected annual returns: 7.5%
Banco Santander, headquartered in Madrid, Spain, is a diversified banking business with operations in Retail Banking, Santander Corporate and Investment Banking, Wealth Management, and Spain Real Estate Activity. The company is global, with a presence in Europe, North America, and South America.
The company has 11,200 branches, with 197,000 employees serving tens of millions of customers around the globe. Santander reports results in euro, but all numbers for this report are in U.S. dollars.
Santander reported fourth quarter and full-year earnings on February 2nd, 2023, and results were better than expected, with the stock soaring following results. The bank reported an 18% jump in net income from the year-ago period, and a new record. Santander reported a full-year profit of 58 cents per ADR share, which was driven by a gain in revenue and interest margins during 2020.
For the fourth quarter the company posted revenue of $14.6 billion, which missed estimates slightly, but was up sharply from $12.7 billion a year ago. Attributable profit was $2.46 billion, up fractionally year-over-year on a constant currency basis. Santander posted net loan loss provisions of $3.25 billion, as the bank is preparing for potential economic weakness in 2023.
Click here to download our most recent Sure Analysis report on SAN (preview of page 1 of 3 shown below):
- 5-year expected annual returns: 15.9%
U.S. Global Investors is a publicly-traded registered investment advisor that looks to provide investing opportunities in niche markets around the world. The company provides sector-specific exchange-traded funds and mutual funds, as well as an interest in the cryptocurrencies space.
The company has a number of niche products in its portfolio of offerings, with the breakdown at roughly two-thirds in gold and natural resources, and the balance in emerging markets, US equity and fixed income products.
Indeed, assets under management have been somewhat volatile, but have moved decidedly in the wrong direction in recent years. U.S. Global Investors is not unique among asset managers in seeing volatile AUM, but its very small scale and overall negative trend in AUM is concerning from our perspective.
U.S. Global Investors reported First Quarter Fiscal 2023 operating income of $1.6 million. The operating margin was a
healthy 36% on total revenues of $4.4 million and net income was $118,000, or $0.01 per share. Average assets under
management for the three-month period ended September 30, 2022, were $2.9 billion, down approximately $1 billion
from the same quarter last year. As of September 30, 2022, AUM was $2.3 billion, a decrease of approximately 46%
from September 30, 2021.
Click here to download our most recent Sure Analysis report on GROW (preview of page 1 of 3 shown below):
Top Stock Under $5: Industrial Logistics Properties Trust (ILPT)
- 5-year expected annual returns: 16.9%
Industrial Logistics Properties Trust is a real estate investment trust that owns and leases industrial and logistics properties throughout the United States. After the acquisition of Monmouth Real Estate Investment, the company’s total portfolio comprises 413 properties. Specifically, 226 of its properties are located on the island of Oahu, Hawaii, and the other 187 properties are located in 38 other states on the mainland. Therefore, around 29% of the company’s annualized revenues are sourced from the state of Hawaii.
Source: Investor Presentation
Industrial Logistics Properties Trust has essentially suspended its dividend, reducing it to a quarterly rate of $0.01. This was to enhance its liquidity until it completes its long-term financing plan for the Monmouth acquisition. In Q2-2020, the company initially anticipated that its dividend would return to a rate at, or close to, its historical level sometime in 2023.
On February 14th, 2023, Industrial Logistics Properties Trust reported its Q4-2022 and full-year results for the period ending December 31st, 2022. For the quarter, rental income came in at $106.3 million, 88.2% higher than the prior-year period.
The increase was due to a larger property portfolio following the acquisition of the previously publicly-listed Monmouth Real Estate. FFO was $5.4 million, 8.25% lower year-over-year, while FFO/share declined by 83.3% to $0.08.
During the year, the company completed a $1.2 billion debt financing with a final maturity date of October 9th, 2027. It fully repaid the $1.4 billion in aggregate principal outstanding under its bridge loan facility. It is now utilizing its robust medium-term cash flows, backed by an occupancy rate of 99.1% and a weighted average remaining lease term of approximately 8.0 years, to continue the restructuring and basically operate to service its debt.
Click here to download our most recent Sure Analysis report on ILPT (preview of page 1 of 3 shown below):
Top Stock Under $5: Itau Unibanco (ITUB)
- 5-year expected annual returns: 17.4%
Itaú Unibanco Holding S.A. is headquartered in Sao Paulo, Brazil. Since then, Itaú has been the most prominent financial conglomerate in the Southern Hemisphere, the world’s tenth-largest bank by market value, and the largest Latin American bank by assets and market capitalization. The bank has operations across South America and other places like the United States, Portugal, Switzerland, China, Japan, and more.
Itaú Unibanco is a very large bank that is headquartered in Brazil. ITUB is a large cap stock with a market capitalization above $40 billion.
In the fourth quarter of 2022, the recurring managerial result was R$7.7 billion, a decrease of 5.1% compared to the previous quarter. The recurring managerial return on equity remained the same at 19.3%, which is the level determined for operations in Brazil. Excluding this effect, the recurring managerial result would have been R$8.4 billion, and the recurring managerial return on equity would have been 21.0% in the fourth quarter.
The loan portfolio grew by 2.0% in Brazil and 2.7% on a consolidated basis, while the individual loan portfolio in Brazil grew by 3.7% in the quarter.
Source: Investor Presentation
Itaú Unibanco has a conservative approach to paying its dividend. The bank pays out dividends to shareholders based on its projected earnings and losses, with the goal being the ability to continue to pay the dividend under various economic conditions.
On the plus side, the very small yield affords the bank better dividend coverage as the payout ratio is in the teens. We, therefore, do not see any risk of a negative change in the dividend policy today, but we are also cautious about future growth given the uncertain outlook for Brazil’s economy.
Click here to download our most recent Sure Analysis report on ITUB (preview of page 1 of 3 shown below):
Top Stock Under $5: Paramount Group (PGRE)
- 5-year expected annual returns: 18.5%
Paramount Group Inc is a real estate investment trust which acquires, manages, and redevelops office properties in the central business district sub-markets of New York City, Washington DC, and San Francisco. Paramount’s primary customers are financial services firms, legal services firms, and technology and media industries.
Paramount owns or has an interest in 13.8 million square feet of high quality office building investments, retail property, and debt and equity investments. Paramount Group trades on the NYSE under the ticker symbol PGRE and is one of the largest publicly owned real estate companies headquartered in New York, NY.
Source: Investor Presentation
On March 15th, 2022, Paramount announced a 10.7% increase to the dividend, from $0.07 quarterly to $0.0775. Paramount Group reported fourth quarter and full year results on February 15th, 2023. The trust announced core funds from operations (FFO) of $54.4 million, or $0.25 per diluted share. Results compared favorably to the prior year’s $52.8 million, or $0.24 per diluted share.
Paramount also reported a 2.6% decrease in same store cash net operating income (NOI) and a 3.8% increase in same store NOI compared to the prior year. The trust leased a total of 205.5K square feet during the quarter. The occupancy rate stood at 91.3% at Q4 2022 end.
Leadership initiated guidance for the 2023 fiscal year and estimates core FFO to come in between $0.88 and $0.94, for a mid-point of $0.91.
Click here to download our most recent Sure Analysis report on PGRE (preview of page 1 of 3 shown below):
Top Stock Under $5: Uniti Group (UNIT)
- 5-year expected annual returns: 30.7%
Uniti Group is a Real Estate Investment Trust (i.e., REIT) that focuses on acquiring, constructing, and leasing out communications infrastructure in the United States. In particular, it owns millions of miles of fiber strand along with other communications real estate. In its recent past it has faced challenges due to its largest tenant filing for bankruptcy and renegotiating its lease with Uniti. However, the REIT is now on firmer footing and is pursuing growth opportunities.
On February 24th, Uniti Group reported Q4 results. Consolidated revenues were $283.7 million, down by 3.2% year-over-year. The REIT generated $0.44 per share in AFFO, beating analyst consensus estimates by $0.06. Furthermore, net income per share was $0.13. The company guided for 2023 revenue of between $1.154 billion and $1.174 billion, in-line with consensus estimates of $1.16 billion.
It is primarily working to drive this growth through refinancing its debt at significantly lower rates in order to generate
increased cash flow from existing revenue streams while also leasing up its under-utilized assets. In the near-term,
however, higher interest rates are delaying this tailwind, resulting in the large decline in AFFO per share expected in
2023. By adding leasing to its assets it can generate extremely high returns on investment capital as additional
customers require minimal additional capital expenditures, but bring in strong cash flows.
Click here to download our most recent Sure Analysis report on UNIT (preview of page 1 of 3 shown below):
High-priced stocks may be unappealing for investors who may not have enough capital. There are many stocks with significantly lower share prices. Of course, a low share price alone does not make a stock a buy. Investors should always conduct their due diligence before buying individual stocks.
At Sure Dividend, we often advocate for investing in companies with a high probability of increasing their dividends each and every year.
If that strategy appeals to you, it may be useful to browse through the following databases of dividend growth stocks:
- The High Yield Dividend Aristocrats List is comprised of the 20 Dividend Aristocrats with the highest current yields.
- The Dividend Achievers List is comprised of ~350 stocks with 10+ years of consecutive dividend increases.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of 48 stocks with 50+ years of consecutive dividend increases.
- The High Yield Dividend Kings List is comprised of the 20 Dividend Kings with the highest current yields.
- The Blue Chip Stocks List: stocks that qualify as Dividend Achievers, Dividend Aristocrats, and/or Dividend Kings
- The High Dividend Stocks List: stocks that appeal to investors interested in the highest yields of 5% or more.
- The Monthly Dividend Stocks List: stocks that pay dividends every month, for 12 dividend payments per year.
- The Dividend Champions List: stocks that have increased their dividends for 25+ consecutive years.
Note: Not all Dividend Champions are Dividend Aristocrats because Dividend Aristocrats have additional requirements like being in The S&P 500.
- The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.