This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Highest-Yielding Dividend Stocks Under $5

NEW YORK ( TheStreet) -- Investors bruised by the recent stock market correction have turned to dividend-paying stocks for stability, and several under-$5 names like Chimera Investment (CIM - Get Report) offer outsized dividend yields to those willing to take the risk.

Dividend stocks are attractive during times of uncertainty 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. Over the last month, the Dow has fallen roughly 10%, putting the index in correction territory.

Chimera Investment's Big Dividend Yield

"When the markets start correcting, investors normally gravitate toward more defensive stocks," says Paul Nolte, managing director with Dearborn Partners. "Those defensive stocks typically have consistency in earnings and a bulk of them pay dividends and may even increase dividends. Investors can get money while they're waiting for the market to turn around in addition to owning a company that has a pretty good earnings flow."

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

But for several stocks trading under $5, the dividend yield -- and risk -- are much greater. For long-term investors, the recent pullback has afforded a lower entry point in several high-yielding dividend stocks under $5, including Chimera, Universal Insurance Holdings (UVE - Get Report) and Primedia (PRM).

Nolte warns that investors looking for dividend-paying stocks that trade below $5 should look at potential candidates closely to see if the dividend will be safe.

"What you have to look for more than anything is coverage, meaning is the dividend covered by cash flow and/or earnings," Nolte says. "What you don't want is to buy a company that is paying out 20 cents a share only to have the dividend cut to a nickel or a penny or even eliminated altogether."

TheStreet narrowed the vast number of dividend-paying, under-$5 stocks by including only those companies based in the U.S. with a yield above 2%. Continue on to view the top dividend stocks trading below $5, sorted by annual yield.

>>Find Ex-Dividend Dates With Our Dividend Calendar
1 of 11

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
QCCO $0.67 11.67%
BOCH $6.28 -1.72%
CIM $14.20 0.28%
MFI $10.43 2.25%
UVE $17.61 2.62%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs