If you’re looking for sources of dividend income, there are a few considerations to keep in mind.
Dividend yields above 7% may be considered unsustainable and high – any dip in cash flow may immediately threaten a high dividend yield. Payout ratios above 35% may also be considered unsustainable and high. The payout ratio, or ratio of dividends to earnings, indicates how much of earnings a company pays back to shareholders. Dips in cash flow can easily threaten a dividend payment when the payment is a large share of earnings.
We ran a screen on stocks priced under $5 for those exhibiting both of these considerations: Dividend yields below 7% and payout ratios below 35%.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.
We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.
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Do you think these stocks pay attractive dividend yields? Use this list as a starting-off point for your own analysis.
List sorted by dividend yield:
1. RAIT Financial Trust (RAS): REIT Industry. Market cap of $162.94 million. Price at $4.16. Dividend yield at 5.66%, payout ratio at 18.31%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.97). The stock has had a couple of great days, gaining 6% over the last week. The stock has performed poorly over the last month, losing 25.22%.
2. First Commonwealth Financial Corp. (FCF): Regional Banks Industry. Market cap of $443.77 million. Price at $4.21. Dividend yield at 2.84%, payout ratio at 23.79%. The stock is a short squeeze candidate, with a short float at 5.44% (equivalent to 9.13 days of average volume). It's been a rough couple of days for the stock, losing 5.79% over the last week.
3. Advanced Semiconductor Engineering Inc. (ASX): Semiconductor Equipment & Materials Industry. Market cap of $5.50 billion. Price at $4.46. Dividend yield at 2.22%, payout ratio at 21.91%. The stock is currently stuck in a downtrend, trading 11.69% below its SMA20, 16.66% below its SMA50, and 18.43% below its SMA200. It's been a rough couple of days for the stock, losing 5.02% over the last week.
4. DRDGOLD Ltd. (DROOY): Gold Industry. Market cap of $181.67 million. Price at $4.68. Dividend yield at 1.44%, payout ratio at 5.98%. The stock has had a couple of great days, gaining 5.83% over the last week.
*All data sourced from Finviz.