Story updated with note on Tasty Baking dividend suspension
BOSTON (TheStreet) -- Investors bruised by the stock-market downturn have turned to dividend-paying shares for safety and stability. That usually means the Dow Jones Industrial Average is the beneficiary.
Still, several under-$5 companies such as Chimera Investment (CIM) offer fast growth as well as outsized dividend yields to those willing to take on greater risk.
Dividend stocks are attractive during times of uncertainty because of the consistent cash payout, and the fundamental belief that companies with large dividends are more prudent. While share prices can move erratically, as the market has during the violence and unrest in the Middle East, dividends typically hold steady. Since Feb. 18, the S&P 500 has dropped 3% and is now below its 50-day moving average, which is a negative technical indicator. The environmental disaster in Japan, the world's second-largest economy, may also cast a pall on global growth and investing. Some companies, such as Dow members Chevron (CVX), Coca-Cola (KO) and Verizon (VZ), offer steady returns through dividends. But for several stocks trading under $5, the dividend yield -- and risk -- are much higher. For long-term investors, the recent pullback has afforded a lower entry point in several high-yielding dividend stocks that trade for less than $5, including Chimera, Universal Insurance Holdings (UVE) and Primedia (PRM). TheStreet narrowed the vast number of dividend-paying under-$5 stocks to those with the largest annual yield, detailed on the following pages.
China Nepstar Chain Drugstore (NPD) Company Profile: China Nepstar Chain Drugstore operates retail drugstores in the People's Republic of China. Shares are up nearly 10% this year but have fallen more than 40% in the past 12 months. Annual Dividend: 26 cents Dividend Yield: 6.2% (forward annual)
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
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.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
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.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV