For more than 50 years, dividend stocks have played a significant role in the returns investors have received. By reinvesting dividends and using the power of compound interest, even penny stocks can pay off big in the long run. Investors can buy cheap dividend stocks under $5 and benefit from a steady stream of cash flow.
In addition to regular income from dividends, the potential for long-term growth is high. Companies that pay dividends tend to be more established and have a track record of stable earnings. This can provide investors with a level of predictability that may not be found in other types of investments.
Additionally dividend income may be taxed at a lower rate than other types of income, providing investors with a tax advantage. Investing in a portfolio of dividend stocks can also provide investors with diversification across different industries and sectors.
So as you can see, there are many benefits to investing in dividend stocks. Here are 5 cheap dividend stocks under $5 for your consideration.
- VAALCO Energy, Inc. (NYSE: EGY)
- Sirius XM Holdings Inc (NASDAQ: SIRI)
- Nordic American Tanker Ltd (NYSE: NAT)
- Kinross Gold Corporation (NYSE: KGC)
- BlackRock Capital Investment Corp (NASDAQ: BKCC)
Cheap Dividends Stocks Under $5
VAALCO Energy, Inc. (NYSE: EGY) – Dividend Yield – 5.67%
VAALCO Energy, Inc. is an independent energy company that is primarily engaged in the exploration, development, and production of crude oil and natural gas in offshore West Africa. The company was founded in 1984 and is headquartered in Houston, Texas.
VAALCO Energy's operations are focused on its Etame Marin block, which is located off the coast of Gabon in West Africa. The block is estimated to contain proven and probable reserves of 12.5 million barrels of oil equivalent, and the company has been producing oil from the block since 2002. VAALCO Energy also has interests in several exploration blocks in the region.
In recent years, VAALCO Energy has focused on improving its financial performance and increasing shareholder value. The company has implemented cost-cutting measures and improved operational efficiency, which has led to increased profitability and cash flow. VAALCO Energy has also returned value to shareholders through a regular quarterly dividend and a share buyback program.
Sirius XM Holdings Inc (NASDAQ: SIRI) – Dividend Yield – 2.75%
Perhaps the most recognizable cheap dividend stock under $5 is Sirius XM Holdings Inc. The leading satellite radio company providing commercial-free music, sports, news, and entertainment programming to subscribers in the United States and Canada. The company was formed through the merger of Sirius Satellite Radio and XM Satellite Radio (2008), and it is headquartered in New York City.
Sirius XM's programming is delivered through two satellites, as well as streaming over the internet and through mobile apps. The company offers a wide range of channels, including music channels covering multiple genres, sports talk, news and entertainment channels, and a variety of exclusive content such as Howard Stern's show.
Sirius XM has been consistently profitable and generates significant cash flow, thanks in part to its subscription-based revenue model. The company has also diversified its revenue streams through advertising and partnerships with automakers to integrate Sirius XM into new cars.
Nordic American Tanker Ltd (NYSE: NAT) – Dividend Yield – 6.40%
Nordic American Tanker Ltd is a shipping company that owns and operates a fleet of crude oil tankers. Based in Hamilton, Bermuda, the company also has additional offices in Oslo, Norway, and New York City.
Nordic American Tanker's fleet consists of approximately 23 Suezmax tankers, which are vessels capable of carrying between 1 and 1.3 million barrels of crude oil. The company primarily operates in the Atlantic Basin, including the North Sea, the Caribbean, and the Americas.
The shipping industry is highly cyclical and can be impacted by a variety of factors, including changes in global oil demand, geopolitical risks, and fluctuations in shipping rates. As a result, Nordic American Tanker's financial performance can be volatile and is heavily dependent on these external factors.
Kinross Gold Corporation (NYSE: KGC) – Dividend Yield – 3.16%
Next on our list of cheap dividend stocks under $5 is Canadian-based gold mining company Kinross Gold Corporation. The company has operations in North and South America, West Africa, and Russia.
KGC's primary focus is on the exploration, development, and production of gold and silver. The company operates mines in several locations, including Nevada and Alaska in the United States, Brazil, Russia, and West Africa. In recent years, the company has focused on optimizing its existing operations and improving its financial performance, including reducing debt and generating strong cash flow.
The gold mining industry can be impacted by a variety of factors, including fluctuations in gold prices, changes in production costs, and geopolitical risks. As a result, Kinross Gold's financial performance can be volatile and is heavily dependent on these external factors.
BlackRock Capital Investment Corp (NASDAQ: BKCC) – Dividend Yield – 11.4%
Rounding out or list of cheap dividend stocks is BlackRock Capital Investment Corp. A publicly traded investment company that provides debt and equity capital to middle-market companies in a variety of industries. Since 2005, the company has been operating out of New York City.
BlackRock Capital Investment primarily invests in senior and subordinated loans, mezzanine debt, and equity securities of companies with EBITDA (earnings before interest, taxes, depreciation, and amortization) between $10 million and $50 million. The company's portfolio includes a diverse range of industries, including healthcare, business services, and consumer goods.
Cheap Dividends Stocks Under $5 – Final Thoughts
It's important to note that investing in dividend stocks does come with risks, including the possibility of a company cutting or suspending its dividend payments. Therefore, it is more important to consider dividend safety over dividend yield alone.
These five cheap dividend stocks under $5 should be a good place to start. Stay up to date with the company's financial health, dividend history, and future prospects. This can help you to determine whether the company is likely to continue paying dividends in the future. For more information on dividend investing, check out our investment opportunities page.