This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Highest-Yielding Dividend Stocks Under $5

Stocks in this article: CIM UVE

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) 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) 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

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,775.67 -2.48 -0.01%
S&P 500 2,063.38 +2.15 0.10%
NASDAQ 4,753.1840 +4.7880 0.10%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs