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TheStreet Open House

Top Dividend Stocks Under $5

( Wendy's/Arby's Group slide updated with earnings results from Thursday.)

NEW YORK ( TheStreet) -- Chimera Investment (CIM) and Technitrol (TNL) are two of several stocks trading for under $5 that offer attractive dividend yields.

It's well known that dividend-paying stocks are attractive because of the consistent cash payout. While share prices can move sharply, as evidenced in the so-called "flash crash" on May 6 when the Dow Jones Industrial Average dropped nearly 1,000 points intraday, dividends typically hold steady; they reward shareholders with more than just stability.

"A lot of people are attracted to strong dividend players because you can see nice growth," said Robert Pavlik, chief market strategist with Banyan Partners. "In some cases, it's certainly better than what you're going to be getting at a bank."

Some companies, like Dow members Verizon (VZ), Pfizer (PFE) and Kraft Foods (KFT), offer steady returns through dividends.

But for some investors, the lowest-priced stock on the Dow ( Alcoa (AA) at $12.50) isn't cheap enough. The good news is that there are several under $5 stocks that can offer both growth and dividend yields that investors are hunting for.

That said, Pavlik warns that investors need to perform their due diligence when picking under $5 stocks with attractive dividend yields.

"If you're in the position to look at them, you want to make sure the balance sheet is strong enough that the company is going to be able to continue to pay the dividend that is forecasted," he said. "I know a lot of retailer investors are looking at a $2 stock that pays a terrific dividend yield. In some instances, though, if it sounds too good to be true it just may be."

With so many stocks trading at $5 and below, TheStreet whittled down the list to include only U.S. companies with a dividend yield over 1%, a market cap of at least $10 million, and more than 10,000 shares traded daily. Continue on to view the top $5 dividend stocks, sorted by market cap.

>>Find Ex-Dividend Dates With Our Dividend Calendar

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