Investment trends have been changing this year as stock markets face pressure from rising inflation. Investors are turning to defensive securities and moving away from growth tech stocks. In this environment of rising interest rates, dividend stocks have become a source of comfort for investors. The NASDAQ, which is heavily weighted towards tech stocks, has experienced a decline of 29.4% this year, compared to a 19.2% drop in the S&P 500 as of October 25.
Dividend stocks have historically generated returns that surpass the broader market. The reinvestment of dividends has a significant impact on overall returns. According to CIBC Asset Management, over the past 15 years ending in August 2021, dividend stocks with reinvestments have had a total return of 10.62%, compared to a price return of 6.89%. The High Dividend Index for Canada, America, and the World has also outperformed the broader market from 2001 to 2020. When investing in dividends, it is important to focus on quality companies with a track record of dividend growth and the potential to maintain those payments. Some popular dividend stocks include Altria Group, Inc. (NYSE:MO), JPMorgan Chase & Co. (NYSE:JPM), and Pfizer Inc. (NYSE:PFE).
In addition to dividend stocks, mutual funds specializing in dividend securities have seen record inflows this year. Bloomberg reports that inflows in dividend ETFs have grown 25% from the previous record in 2021, with positive inflows every month this year. Bloomberg Intelligence estimates that high dividend ETFs will double their inflows this year.
Here is a list of the 11 best dividend stocks under $5:
11. Diversified Healthcare Trust (NASDAQ:DHC)
Share Price as of October 27: $1.20
Diversified Healthcare Trust is an American real estate investment trust company that owns and manages high-quality healthcare properties across 36 states in the US. The company had approximately $868.4 million in cash and cash equivalents at the end of June 2022, compared to $634.8 million six months ago. In Q2 2022, the company's revenue amounted to $313 million. Diversified Healthcare Trust has not raised its dividend since the pandemic of 2020, but it has paid regular dividends to shareholders. The company currently offers a quarterly dividend of $0.10 per share and has a dividend yield of 3.33%.
10. Lloyds Banking Group plc (NYSE:LYG)
Share Price as of October 27: $1.94
Lloyds Banking Group plc is one of the UK's largest financial services companies with over 30 million customers worldwide. In the first half of FY22, the company paid £550 million in dividends to shareholders and completed £1.3 billion worth of its share buyback program. Its net interest income for this period came in at £6.14 billion, up 13.3% from the same period last year. Lloyds Banking Group plc currently pays a quarterly dividend of $0.038 per share and has a dividend yield of 5.32%.
9. Mizuho Financial Group, Inc. (NYSE:MFG)
Share Price as of October 27: $2.24
Mizuho Financial Group, Inc. is a Tokyo-based bank holding company that offers financial and strategic services. In fiscal Q1 2022, the company reported an ordinary income of 1.24 trillion JPY, showing a 67.6% growth from the same period last year. It reported roughly 54 trillion JPY in cash and due from the banks at the end of the quarter. Mizuho Financial Group, Inc. currently pays a quarterly dividend of 20 JPY and has a dividend yield of 6.88%.
8. Silvercorp Metals Inc. (NYSE:SVM)
Share Price as of October 27: $2.53
Silvercorp Metals Inc. is a Canadian precious metals company involved in the exploration and development of silver-containing properties. The company pays dividends twice a year and currently offers a semi-annual dividend of $0.0125 per share, with a dividend yield of 0.99%. In fiscal Q1 2023, the company reported revenue of roughly $64 million, up from $58.8 million during the same period last year. At the end of June, the company had over $150.2 million in cash and cash equivalents.
7. New York Mortgage Trust, Inc. (NASDAQ:NYMT)
Share Price as of October 27: $2.62
New York Mortgage Trust, Inc. is an American real estate investment trust company that delivers stable distributions to its customers. In the second quarter of 2022, the company reported an operating cash flow of over $40 million, compared to $38.1 million in the previous quarter. New York Mortgage Trust, Inc. currently pays a quarterly dividend of $0.10 per share and has a dividend yield of 15.27%.
6. Harmony Gold Mining Company Limited (NYSE:HMY)
Share Price as of October 27: $2.86
Harmony Gold Mining Company Limited is the largest gold mining company in South Africa. The company recently announced the acquisition of the Eva Copper project in Australia to diversify into copper. In September, UBS expressed concerns regarding the company's earnings but recommended increasing exposure to gold. Harmony Gold Mining Company Limited currently pays an interim dividend of $0.01 per share and has a dividend yield of 1.38%.
For the full list of the 11 best dividend stocks under $5, please continue reading the article.
Disclosure: None. This article was originally published on Insider Monkey.