Updated on June 21st, 2022 by Bob Ciura
We firmly believe that investors looking to generate superior returns over the long-term, without taking excessive risks, should focus on high-quality dividend growth stocks.
This is why we focus on the Dividend Aristocrats.
The Dividend Aristocrats are a select group of 65 S&P 500 stocks with 25+ years of consecutive dividend increases.
They are the ‘best of the best’ dividend growth stocks. The Dividend Aristocrats have a long history of outperforming the market.
The requirements to be a Dividend Aristocrat are:
- Be in the S&P 500
- Have 25+ consecutive years of dividend increases
- Meet certain minimum size & liquidity requirements
There are currently 65 Dividend Aristocrats. You can download an Excel spreadsheet of all 65 (with metrics that matter such as dividend yields and price-to-earnings ratios) by clicking the link below:
Investors can successfully implement a dividend growth investing strategy by finding quality dividend stocks that are also trading at attractive valuations.
In this article, we present a method for investors to quickly and effectively screen for cheap dividend stocks with a downloadable list.
We also provide the top 20 cheap dividend stocks to buy now.
Keep reading this page to learn about how to use the cheap dividend stocks list to find investment ideas.
Table of Contents
You can skip to a particular section using the table of contents below:
Why Buy Cheap Stocks?
There is a significant body of empirical research to suggest that buying stocks with low valuation multiples leads to better returns than buying stocks with high valuation multiples.
This was especially true from 1975-2010, when stocks with low price-to-earnings ratios significantly outperformed stocks with higher price-to-earnings ratios.
As an example of this trend, consider research from Brandes Investment Partners which showed that the lowest decile of price-to-earnings ratio stocks outperformed the highest decile of price-to-earnings ratio stocks by 10.1% per year between 1975 and 2010.
However, this dynamic completely changed in the decade after the Great Recession ended. From 2010-2020, growth stocks dominated value stocks. You can see this outperformance of growth stocks relative to value stocks in the image below:
Source: The Case for Value by Callodine Capital Research
Growth stocks exhibited far stronger relative earnings-per-share growth and returns compared with value stocks. There were a number of reasons for this, primarily the extended period of low interest rates and a macroeconomic backdrop of low economic growth.
However, market cycles can reverse. As the following graph shows, when the S&P 500 is split up into quintiles, valuation spreads between higher P/E quintile and lower P/E quintile are at the highest point since the ’99-’00 tech bubble.
Source: The Case for Value by Callodine Capital Research
Separately, the strong outperformance of growth stocks has caused a shift in asset mix among institutional investor groups, leaving many relatively under-invested in value stocks.
The overall takeaway is that as the economic cycle matures, and with value stocks offering attractive price-to-earnings ratios and high dividend yields, value could become an attractive strategy once again.
In the next section of this article, we will discuss the merits of investing in dividend stocks and explain why cheap dividend stocks are an especially attractive combination.
Why Buy Dividend Stocks?
The obvious benefit of investing in dividend stocks is they allow you to generate a passive income stream from your investment portfolio.
Importantly, there are other benefits. Dividend stocks have a long history of outperforming the broader stock market.
According to a report from Hartford Funds, since 1960 approximately 84% of the total return of the S&P 500 Index was due to reinvested dividends and compounding.
Source: Hartford Funds
Combining value investing and dividend investing to find cheap dividend stocks is very powerful because it not only combines two time-tested strategies (value and dividends), but it also allows investors to have a higher starting yield for their investment portfolio.
Therefore, investors looking for the highest return potential should take a closer look at cheap dividend stocks.
The Top 20 Cheap Dividend Stocks Now
The following 20 cheap dividend stocks represent the highest 5-year expected annual returns among dividend stocks that have P/E ratios below 15, as well as Dividend Risk Scores of ‘C’ or better.
Lastly, only U.S. based companies were included in the cheap dividend stocks screen, while REITs and MLPs were excluded.
The top 20 cheap dividend stocks are based on 5 year forward expected total return estimates from the Sure Analysis Research Database.
Cheap Dividend Stock #20: Comcast Corporation (CMCSA)
- P/E Ratio: 10.6
- 5-year Annual Expected Returns: 17.2%
Comcast is a media, entertainment and communications company. Its business units include Cable Communications
(High-Speed Internet, Video, Business Services, Voice, Advertising, Wireless), NBCUniversal (Cable Networks, Theme Parks, Broadcast TV, Filmed Entertainment), and Sky, a leading entertainment company in Europe that provides Video, High-speed internet, Voice, and Wireless Phone Services directly to consumers.
Comcast reported its Q1 2022 results on 04/28/22. For the quarter, the company’s revenues climbed 14.0% to $31.0 billion, adjusted EBITDA (a cash flow proxy) rose 8.8% to 9.2 billion, adjusted earnings-per-share (EPS) climbed 13.2% to $0.86, and it generated free cash flow (FCF) of $4,760 million.
During the quarter, the company returned $4.2 billion of capital via $1.2 billion in dividends and $3.0 billion in stock buybacks. (Comcast began buying back its common stock again in Q2 2021 since the 2020 pandemic.) Comcast’s Cable customer relationships boosted by 2.7% to 34.4M. The company experienced net additions of 194K Cable Communications customer relations and had broadband customer net additions of 262K as well as added 318K wireless lines (the best quarter since launch of Xfinity Mobile in 2017).
Its Cable segment experienced stable adjusted EBITDA growth of 6.5%. NBCUniversal revenue and adjusted EBITDA jumped 46.6% to $10.3 billion and 7.4% to $1.6 billion, respectively, thanks to strong rebound in revenues for this segment and “exceptional demand” at its theme parks.
The Sky segment saw revenue decline 0.5% marginally and adjusted EBITDA growth of 71.2%. The jump in the latter is due to strong performance in the U.K. and lower sports programming costs. We continue to believe that Comcast will remain a healthy solid dividend-paying company as it continues to generate substantial FCF.
Cheap dividend stocks like Comcast have appeal because it allows investors to purchase dividend growth stocks at a discount.
Click here to download our most recent Sure Analysis report on CMCSA (preview of page 1 of 3 shown below):
Cheap Dividend Stock #19: Williams-Sonoma (WSM)
- P/E Ratio: 8.1
- 5-year Annual Expected Returns: 17.7%
Williams-Sonoma is a specialty retailer that operates home furnishing and houseware brands, such as Williams-Sonoma, Pottery Barn, West Elm, Rejuvenation, Mark and Graham and others.
Source: Investor Presentation
In late May, Williams-Sonoma reported (5/25/22) financial results for the first quarter of fiscal 2022. Comparable brand revenue grew 9.5% over last year’s quarter thanks to growth of 14.6% and 12.8% in Pottery Barn and West Elm, respectively. The company grew its earnings-per-share 20%, from $2.93 to $3.50, and beat the analysts’ consensus by an impressive $0.61. It was the ninth consecutive quarter in which it exceeded the analysts’ consensus by a wide margin.
Thanks to its sustained business momentum, Williams-Sonoma has raised its dividend by 10% and has a share repurchase program of $1.0 billion, enough to reduce the share count by 11% at the current stock price. In addition, management reiterated its long-term guidance for mid-to-high single digit annual revenue growth, including this year, with a path to reach $10 billion in sales by 2024 (from $8.2 billion in 2021).
Thanks to its sustained business momentum, Williams-Sonoma raised its dividend by 10%. We expect annual returns of 15.8% per year, driven by expected EPS growth of 4% per year, the 2.5% dividend yield, and a ~9.3% annual boost from an expanding P/E multiple.
Click here to download our most recent Sure Analysis report on Williams-Sonoma (preview of page 1 of 3 shown below):
Cheap Dividend Stock #18: V.F. Corp. (VFC)
- P/E Ratio: 13.2
- 5-year Annual Expected Returns: 17.8%
V.F. Corporation is one of the world’s largest apparel, footwear and accessories companies. The company’s brands include The North Face, Vans, Timberland and Dickies. The company, which has been in existence since 1899, generated over $11 billion in sales in the last 12 months.
In mid-May, V.F. Corp reported (5/19/22) financial results for the fourth quarter of fiscal 2022. Revenue and organic revenue grew 9% and 12%, respectively, over the prior year’s quarter, driven by the EMEA and North American regions, which experienced a negative impact from the pandemic in the prior year’s period.
Source: Investor Presentation
Adjusted earnings-per-share grew 67%, from $0.27 to $0.45, but missed analysts’ consensus by $0.02. For the new fiscal year, V.F. Corp expects revenue growth of at least 7% and adjusted earnings-per-share of $3.30 to $3.40.
Cheap dividend stocks like VF Corp are attractive because the contraction of the share price has resulted in a high dividend yield exceeding 4%.
Click here to download our most recent Sure Analysis report on V.F. Corp. (preview of page 1 of 3 shown below):
Cheap Dividend Stock #17: 3M Company (MMM)
- P/E Ratio: 11.9
- 5-year Annual Expected Returns: 17.9%
3M sells more than 60,000 products that are used every day in homes, hospitals, office buildings and schools around the world. It has about 95,000 employees and serves customers in more than 200 countries.
Source: Investor Presentation
3M is now composed of four separate divisions. The Safety & Industrial division produces tapes, abrasives, adhesives and supply chain management software as well as manufactures personal protective gear and security products.
The Healthcare segment supplies medical and surgical products as well as drug delivery systems. Transportation & Electronics division produces fibers and circuits with a goal of using renewable energy sources while reducing costs. The Consumer division sells office supplies, home improvement products, protective materials and stationary supplies.
On April 26th, 2022, 3M reported first quarter earnings results for the period ending March 31st, 2022. Revenue fell 0.3% to $8.8 billion, but was $50 million better than expected. Adjusted earnings-per-share of $2.65 compared to $2.77 in the prior year, but was $0.34 above estimates. Organic growth for the quarter was 2%.
Safety & Industrial grew 0.5% due to strength in industrial adhesives and tapes, abrasives, and masking systems, though personal safety declined. Transportation & Electronics decreased by 0.3%. Commercial solutions growth was offset by a decline in transportation and safety. Health Care grew 4.7%. Consumer was higher by 3.4% as demand for home care, stationery and office and home improvement products continues to be strong.
3M provided an updated outlook for 2022, with the company now expecting adjusted earnings-per-share of $10.75 to $11.25. Cheap dividend stocks like 3M are legendary for their long histories of growth and dividends.
Click here to download our most recent Sure Analysis report on 3M (preview of page 1 of 3 shown below):
Cheap Dividend Stock #16: Lam Research (LRCX)
- P/E Ratio: 13.2
- 5-year Annual Expected Returns: 17.9%
Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used to fabricate integrated circuits worldwide. Lam is a major supplier of wafer fabrication equipment and services to the semiconductor industry. Its products address various applications, including thin film deposition, single-wafer cleaning, and plasma tech.
On April 20, 2022, Lam Research reported results for the third quarter of Fiscal Year (FY)2022, ending on March 27, 2021. Lam Research Corporation ends its fiscal year at the end of June. Revenue grew by over 5.5% compared to 3Q21 from $3.8 billion to $4.1 billion. However, compared to the second quarter of FY2022, revenue is down (4)%.
Net income also was down by 4.6% to $1.0 billion. On a per-share basis, the company earned $7.30 for the quarter, (1.4)% lower than in the third quarter of the fiscal year 2021, and it was (13.5)% lower than the last quarter. For the first nine months of the fiscal year, revenue is up 20%, and net income is up 22.9% compared to the first nine of FY2021. Also, earnings are up 26.8% for the nine months compared to the first nine months of FY2021.
Click here to download our most recent Sure Analysis report on LRCX (preview of page 1 of 3 shown below):
Cheap Dividend Stock #15: Microchip Technology (MCHP)
- P/E Ratio: 10.5
- 5-year Annual Expected Returns: 18.1%
Microchip Technology develops, manufactures, and sells smart, connected and secure embedded control solutions used for a wide variety of applications. These include disruptive growth trends such as 5G, artificial intelligence, Internet of Things (IoT), and autonomous driving, amongst others, in key end markets such as automotive, aerospace and defense, communications.
The company’s strategic focus is that these solutions are cost-effective, offer high performance, with a wide voltage range operation, at extremely low power usage. Microchip Technology generates around $6 billion in annual revenues.
On May 9th, Microchip Technology raised its dividend by 9.1% to a quarterly rate of $0.276. On a year-over-year basis, the dividend grew by 33.6%.
On the same day, Microchip Technology also reported its Q4-2022 results for the quarter ending March 31st, 2022. Net sales were a record $1.84 billion, up 25.7% from the comparable period last year and 4.9% higher sequentially. Higher revenues were again powered by exceptional execution on delivering Microchip’s backlog and strong underlying demand despite the ongoing manufacturing capacity constraints amid supply chain constraints.
On a non-GAAP basis, EPS was $1.35 versus $0.93 in Q4-2021. Non-GAAP results are more meaningful in Microchip’s case as it excludes the company’s high share-based compensation, manufacturing excursion, high depreciation & amortization, and other factors. Non-GAAP EPS for the year amounted to $4.61, an increase of 39.7% compared to fiscal 2021.
Click here to download our most recent Sure Analysis report on MCHP (preview of page 1 of 3 shown below):
Cheap Dividend Stock #14: Synchrony Financial (SYF)
- P/E Ratio: 5.0
- 5-year Annual Expected Returns: 18.2%
Synchrony Financial is a consumer financial services company. It operates through the following business units: Payment Solutions, Retail Credit, and CareCredit. Synchrony Financial offers private label credit cards, small-size business credit products, promotional financing for higher-priced consumer goods, promotional financing for healthcare procedures such as dental and vision, as well as a range of other services to its customers.
Synchrony Financial reported its first quarter earnings results on April 18. The company managed to generate revenues of $3.4 billion during the quarter, which was down by a marginal 0.6% versus the previous year’s quarter, despite an expansion in the company’s net interest margin.
The company also saw its credit quality improve, as net charge-offs dropped from a level of 3.62% one year ago to 2.73% during the most recent quarter, reflecting the healthy macro backdrop for consumers. The lower charge-offs had a positive impact on Synchrony’s profitability.
Synchrony Financial generated earnings-per-share of $1.73 during the first quarter, which beat the analyst consensus estimate by a wide $0.19. Profits were up substantially on a sequential basis, climbing by almost 30% quarter-overquarter.
Click here to download our most recent Sure Analysis report on SYF (preview of page 1 of 3 shown below):
Cheap Dividend Stock #13: Sonoco Products Company (SON)
- P/E Ratio: 9.7
- 5-year Annual Expected Returns: 18.6%
Sonoco Products provides packaging, industrial products and supply chain services to its customers. The markets that use the company’s products include those in the appliances, electronics, beverage, construction and food industries. Sonoco was founded in Hartsville, South Carolina in 1899 and introduced the first paper textile cone. The company generates about $7.2 billion in annual sales. Sonoco Products is now composed of 2 segments, Consumer Packaging and Industrial Packaging, with all other businesses listed as “all other”.
On April 21st, 2022, Sonoco Products reported first quarter earnings results for the period ending April 3rd, 2022. Revenue grew 31.1% to a company record $1.77 billion, which was in-line with analysts’ expectations. Adjusted earnings-per-share of $1.85 compared to $0.90 in the prior year and was $0.13 above estimates.
Consumer Packaging revenues grew 49% to a segment record $868.1 million, due in large part to the purchase of Ball Metalpack that closed in the fourth quarter. Higher selling prices also factored into results. Flexible packaging and plastics saw strength in confectionery and food service products.
Demand for fresh and prepared foods was also strong, though supply chain issues impacted results. The segment operating margin improved 600 basis points to 20% as price increases more than offset higher input costs. Industrial Paper Packing sales improved 23.7% to a segment record $699.1 million as higher selling prices more than offset a small volume decline. The segment operating margin expanded 120 basis points to 10.4%.
Sonoco Products provided an updated outlook for 2022 as well, with the company expecting adjusted earnings-pershare of $5.25 to $5.45 for the year, up from $4.60 to $4.80 previously.
Click here to download our most recent Sure Analysis report on SON (preview of page 1 of 3 shown below):
Cheap Dividend Stock #12: Harley-Davidson, Inc. (HOG)
- P/E Ratio: 7.1
- 5-year Annual Expected Returns: 18.8%
Since 1903, Harley Davidson has been making American-style motorcycles. They take pride in being the pioneers of the style of bikes they manufacture and finance the sale of. Harley Davidson also makes and sells parts, accessories,
merchandise and maintenance/repair services.
Harley-Davidson reported Q1 results on 04/27/2022. Q1 GAAP earnings-per-share stood at $1.45. Revenue increased 5.6% to $1.5 billion year-over-year. Operating income fell by 16% year-over-year. Meanwhile, Harley-Davidson reaffirmed its full-year 2022 HDMC operating income growth guidance of 11% to 12%, and HDMC revenue growth of 5% to 10%, capital investment of $190 million to $220 million, and expects HDFS operating income to decline by 20% – 25%.
Harley-Davidson has a competitive advantage with its history, unique style and name brand recognition. HarleyDavidson has crafted their image through careful marketing such as licensing deals with TV shows such as ‘Sons of
Anarchy’ that convey the brand’s image.
The company’s dividend history has been good except for the last recession, when the dividend was cut from $1.29 in 2008 to $0.40 in 2009. This change came as their earnings per share fell from $3.77 in 2008 to $1.11 in 2009. As their motorcycles are mainly luxury items, Harley Davidson’s sales are significantly impacted by economic downturns. During the Great Recession, Harley-Davidson was hit hard, losing 86% of its market capitalization. Earnings per share also dropped to $0.06 in 2009.
Click here to download our most recent Sure Analysis report on HOG (preview of page 1 of 3 shown below):
Cheap Dividend Stock #11: Ally Financial (ALLY)
- P/E Ratio: 4.1
- 5-year Annual Expected Returns: 18.8%
Ally Financial provides financial services to consumers, businesses, automotive dealers and corporate clients. Its
segments include Automotive Finance Operations, Insurance Operations, Mortgage Finance Operations, and Corporate Finance Operations. Its services include term loans, lines of credit, fleet financing, vehicle financing, commercial insurance products, etc.
Ally Financial also has a held-for-investment consumer mortgage finance loan portfolio with mortgages that were originated by third parties.
Ally Financial reported its first quarter earnings results on April 14. The company reported that its revenues totaled $2.1 billion during the quarter, which was 11% more than Ally Financial’s revenues during the same quarter a year ago. Ally originated $12 billion in new consumer auto loans during the quarter and managed to grow its deposits by $1.3 billion during the quarter.
At the end of the quarter, retail deposits totaled $136 billion. Due to lower provisions and higher revenues, Ally’s bottom line performance improved markedly on a year over year basis, and the company
managed to hit net earnings of more than $700 million during the quarter.
Ally Financial’s earnings-per-share during the first quarter were strong, as it generated profits of $2.03 per share. Earnings-per-share showed a strong recovery in 2021, as earnings-per-share hit a new record level of $8.60.
It is expected that Ally Financial’s earnings-per-share will decline in 2022 due to lower reserve releases, but profits should nevertheless remain well above pre-pandemic levels this year.
Click here to download our most recent Sure Analysis report on ALLY (preview of page 1 of 3 shown below):
Cheap Dividend Stock #10: KKR & Company Inc. (KKR)
- P/E Ratio: 9.4
- 5-year Annual Expected Returns: 19.3%
KKR & Co is a global investment company founded in 1976. The company currently has over 1500 employees across 16 countries and holds assets under management (AUM) of $471 billion. KKR operates in four business lines: Private Markets, Public Markets, Capital Markets, and Principal Activities.
KKR manages private equity funds that invest capital for long-term appreciation through the Private Markets business line. The company reports on its credit business in the public markets segment, which invests in leveraged credit strategies such as leveraged loans and high-yield bonds.
The capital market segment provides debt and equity services from which they earn fees such as underwriting, placement, transaction and syndication fees, and commissions. Finally, the company’s principal activities business line manages the firm’s assets on the balance sheet and deploys capital to support the Private Markets and Public Markets business lines.
KKR & Co released first-quarter 2022 results on May 3rd, 2022. Fee-related earnings were up 66% to $605 million or $0.69 per share, while after-tax distributable earnings were up 47% to $1 billion or $1.10 a share. AUM increased to $479 billion, up 30% year-over-year, with $26 billion of organic new capital raised in the quarter.
The Private Markets segment increased AUM by 51% year-over-year with $13 billion invested in real estate and the traditional private equity portfolio, which appreciated by 19%. In total, the company invested $21 billion during this quarter which now totals $88 billion over the last 12 months.
Perpetual capital or capital that has no predetermined requirement to return invested capital to investors upon the realization of investments represents 34% of AUM and is up 36% to $165 billion. The growth of Global Atlantic is the primary driver of the increase in perpetual capital.
Click here to download our most recent Sure Analysis report on KKR (preview of page 1 of 3 shown below):
Cheap Dividend Stock #9: Triton International (TRTN)
- P/E Ratio: 4.8
- 5-year Annual Expected Returns: 19.4%
Triton International is the world’s largest lessor of intermodal containers. The company’s intermodal containers are large, standardized steel boxes used to transport freight by ship, rail, or truck. Due to the handling efficiencies they provide, intermodal containers are the primary means by which many goods and materials are shipped internationally. Per its latest filings, Triton’s total fleet consisted of containers and chassis representing 6.3 million twenty-foot equivalent units. The company generates around $1.7 billion in annual revenues.
On May 3rd, 2022, Triton reported its Q1-2022 results for the period ending March 31st, 2022. Total leasing revenues during the quarter equaled $417.1 million, 20.3% higher versus the comparable period last year. Revenues were driven by strong momentum in goods consumption, high levels of trade growth, and lasting logistical bottlenecks that slowed container turn-times, leading to incremental demand for containers.
Following limited vessel capacity, freight rates remained elevated as Triton’s customers focus on container availability. As a result, the company’s increased fleet remained highly occupied, leading to Triton achieving another quarter of record profitability.
Adjusted EPS came in at $2.76 compared to $1.91 in Q1-2021, following economies of scale and declining interest expenses. The company’s fleet utilization remained stable quarter-over-quarter, at 99.6%, which is highly impressive. Amid record operating cash flows, Triton repurchased 1.7 million common shares (around 2.5% of its shares outstanding) during Q1. It further boosted its stock repurchase program by $200 million.
Click here to download our most recent Sure Analysis report on TRTN (preview of page 1 of 3 shown below):
Cheap Dividend Stock #8: State Street (STT)
- P/E Ratio: 8.0
- 5-year Annual Expected Returns: 19.5%
State Street Corporation is a Boston based financial services company which traces its roots back to 1792. State Street trades under the ticker STT and has increased its dividend for 12 consecutive years. State Street is one of the largest asset management firms in the world with approximately $4 trillion of assets under management and $44 trillion of assets under custody and administration.
In September of 2021, State Street announced the acquisition of Brown Brothers Harriman Investor Services for $3.5 billion, which would make State Street the number one asset servicing firm globally. Asset servicing provides back-end operations for many of the world’s most popular funds and ETF’s. State Street’s main competitors include BlackRock, Bank of New York Mellon, and Vanguard.
You can see an overview of State Street’s first-quarter highlights in the image below:
Source: Investor Presentation
We expect annual returns of 16.8% per year for State Street. This will be driven by 7% expected EPS growth, plus the 3.3% dividend yield and a sizable boost from an expanding P/E multiple.
Click here to download our most recent Sure Analysis report on State Street (preview of page 1 of 3 shown below):
Cheap Dividend Stock #7: MDC Holdings (MDC)
- P/E Ratio: 3.0
- 5-year Annual Expected Returns: 19.9%
M.D.C. Holdings has two primary operations, home building and financial services. Its home building operation purchases finished lots or develops lots to the extent necessary for the construction and sale of single-family detached homes to home buyers under the name “Richmond American Homes.” Its financial services operation issues mortgage loans primarily for the home buyers of the company while it also sells insurance coverage.
Due to the nature of its business, M.D.C. Holdings has always been highly vulnerable to recessions, as demand for new homes plunges during rough economic periods. In the Great Recession, the quarterly sales of M.D.C. Holdings plunged 99% within just a few quarters and the company incurred hefty losses.
However, M.D.C. Holdings has proved markedly resilient throughout the coronavirus crisis. Despite the fierce recession caused by the unprecedented lockdowns imposed in 2020, the home builder grew its earnings per share 50% in that year, from $3.56 to $5.33.
Even better, thanks to the excessive fiscal stimulus packages offered by the government and strong pent-up demand, M.D.C. Holdings posted blowout results in 2021.
Source: Investor Presentation
The company grew its home sale units by 22%, from 8,158 to a record 9,982, and its earnings per share by 53%, from $5.33 to a new all-time high of $8.13.
Even better, the business momentum remains strong. In the fourth quarter, the company grew its home sale revenues 22% over the prior year’s quarter thanks to a 4% increase in new units and a 17% increase in average selling prices. As a result, it grew its earnings per share 10%.
Click here to download our most recent Sure Analysis report on MDC (preview of page 1 of 3 shown below):
Cheap Dividend Stock #6: Qualcomm Inc. (QCOM)
- P/E Ratio: 9.6
- 5-year Annual Expected Returns: 20.0%
Qualcomm, as it is known today, develops and sells integrated circuits for use in voice and data communications. The chip maker receives royalty payments for its patents used in devices that are on 3G and 4G networks.
On April 27th, 2022, Qualcomm announced results for the second quarter of fiscal year 2022 for the period ending March 31st, 2022 (the company’s fiscal year ends September 30th, 2022). Revenue surged 41.1% to $11.2 billion, topping expectations by $600 million. Adjusted earnings-per-share of $3.21 compared very favorably to $1.90 in the previous year and was $0.29 ahead of estimates.
Qualcomm recently increased its dividend by 10%, and the stock now yields 2.1%. The company has increased its dividend for 20 consecutive years. We expect 7% annual EPS growth through 2027, leading to 16.5% expected annual returns.
Click here to download our most recent Sure Analysis report on Qualcomm (preview of page 1 of 3 shown below):
Cheap Dividend Stock #5: Stanley Black & Decker (SWK)
- P/E Ratio: 10.2
- 5-year Annual Expected Returns: 20.9%
Stanley Black & Decker is a world leader in power tools, hand tools, and related items. The company holds the top global position in tools and storage sales. Stanley Black & Decker is second in the world in the areas of commercial electronic security and engineered fastening.
You can see an overview of the company’s 2022 first-quarter performance in the image below:
Source: Investor Presentation
On April 28th, 2022, Stanley Black & Decker announced first quarter results. Revenue grew 20% to $4.4 billion, but was $220 million lower than expected. Adjusted earnings-per-share of $2.10 compared unfavorably to $3.13 in the prior year, but was $0.40 ahead of estimates. Organic growth fell 1%.
Stanley Black & Decker offered revised guidance for 2022. Due to inflationary pressures, the company now expects adjusted earnings-per-share in a range of $9.50 to $10.50, down from $12.00 to $12.50 previously. Organic revenue is projected in a range of 7% to 8%.
The stock has a 2.7% dividend yield, and we expect 8% annual EPS growth. With a ~6.5% annual boost from an expanding P/E multiple, total returns are expected to reach 17.2% per year.
Click here to download our most recent Sure Analysis report on SWK (preview of page 1 of 3 shown below):
Cheap Dividend Stock #4: Big Lots (BIG)
- P/E Ratio: 4.3
- 5-year Annual Expected Returns: 21.0%
Big Lots is a home discount retailer with a focus on closeouts and low prices. With $6 billion in sales and a market cap of around $930 million, this S&P 600 component can trace its history to 1967.
Source: Investor Presentation
The company reported Q4 and full year 2021 results on March 3rd, 2022 and announced a quarterly dividend of $0.30 per share. With 2021 earnings of $5.33 per share, and a forward annualized dividend of $1.20, the dividend is well covered by their existing business, despite the decrease in earnings since 2020 where they reported $7.35 per share in earnings.
Despite a negative impact of around $0.30 per share as a result of adverse shrink, and the issues with the supply chain that characterized 2021, the management team is confident that 2022 will see these issues abate. In 2022 the company plans on opening 50 net new stores, more than they have in the past 5 years combined, which should provide an opportunity for additional revenue growth.
Big Lots stock has a P/E below 5, making it a deep-value stock. Shares also have a dividend yield of 4.1%, while we expect no EPS growth. Total returns are estimated at 14.1% over the next five years.
Click here to download our most recent Sure Analysis report on Big Lots (preview of page 1 of 3 shown below):
Cheap Dividend Stock #3: Lennox International (LII)
- P/E Ratio: 13.2
- 5-year Annual Expected Returns: 22.1%
Lennox International (LII) is a company that manufactures and sells HVAC products (heating, ventilation, and air
conditioning). About 94% of sales come from North America (particularly the US and Canada), and about 6% of sales are International.
The company operates through 3 segments: Residential Heating & Cooling, Commercial Heating & Cooling, and Refrigeration, which made up 66%, 21%, and 13% of 2021 sales, respectively. To preface this business, 75% of sales come from Replacements, and only 25% of sales come from New Construction – which means that this business’s performance isn’t directly tied to new home sales.
On the Residential side of the business, the company is focused on geographic expansion of their store footprint, so they can continue to serve more households. At the end of 2021, the business had 232 stores, and the company expects to add 30 stores in 2022 to bring the store total to 262. The business has a vision to have 350 stores by 2026.
On April 25th, 2022, Lennox International reported Q1 2022 results for the period ending March 31st, 2022. The business earned $2.36 in adjusted earnings-per-share in the quarter, up 4% year-over-year, and revenue increased 9% year-overyear to $1.01 billion.
Click here to download our most recent Sure Analysis report on LII (preview of page 1 of 3 shown below):
Cheap Dividend Stock #2: Hanesbrands (HBI)
- P/E Ratio: 5.6
- 5-year Annual Expected Returns: 22.8%
Hanesbrands is a leading marketer of everyday basic innerwear and activewear apparel. It sells its products under well-known brands, including Hanes and Champion, in America, Europe, Australia and the Asia-Pacific region.
Hanesbrands spent $2.9 billion on acquisitions in the last seven years but has dramatically underperformed the S&P 500 in the last five years, losing -44% while the index rallied 66%.
The company is trying to assimilate its past acquisitions while it is facing intense competition and a secular shift towards online sales. The high debt load from past acquisitions burdens the company via high interest expense.
In early May, Hanesbrands reported (5/5/21) financial results for the first quarter of fiscal 2022. Revenue grew 5% over the prior year’s quarter, with 6% growth in the global Champion brand and 1.5% growth in the U.S. innerwear business.
However, the company was hurt by supply chain disruptions and high cost inflation. As a result, its adjusted earningsper-share dipped 13%, from $0.39 to $0.34. Hanesbrands expects 4% revenue growth and adjusted earnings-per-share of $1.64-$1.81.
Click here to download our most recent Sure Analysis report on HBI (preview of page 1 of 3 shown below):
Cheap Dividend Stock #1: Skyworks Solutions (SWKS)
- P/E Ratio: 8.0
- 5-year Annual Expected Returns: 23.7%
Skyworks Solutions is a semiconductor company that designs, develops, and markets proprietary semiconductor products used worldwide. Its products include antenna tuners, amplifiers, converters, modulators, receivers, and switches.
In the most recent quarter, revenue grew 15% year-over-year. Adjusted diluted earnings per share of $3.14 compared to $3.36 per share in the same quarter last year. Overall, Skyworks delivered first-quarter solid results, with double-digit sequential growth in both revenue and earnings per share.
Skyworks has a strong balance sheet with over $1 billion in cash and cash equivalents and no debt. This gives the company tremendous flexibility and resiliency to offset some of its concentrated customer base risks and move forward with its growth plans. The dividend is very well covered by earnings, and we consider it very safe. The company remained profitable during the previous recession.
Cheap dividend stocks like Skyworks are a prime example of the total return potential of buying undervalued dividend growth stocks.
Click here to download our most recent Sure Analysis report on SWKS (preview of page 1 of 3 shown below):
Final Thoughts and Other Investing Resources
Cheap dividend stocks are appealing for long-term investors, as they could generate high returns through EPS growth, dividends, and an expanding P/E ratio.
Having an Excel document with the names, tickers, and financial information of all cheap dividend stocks with price-to-earnings ratios below 15 can be very useful. However, it may not have fulfilled your needs for investing due diligence.
If you have perused our list of cheap dividend stocks and are still looking for your next investment idea, take heart. Sure Dividend has plenty of other free dividend investing resources available to help. In particular, you might be interested in looking through our lists of dividend stocks ranked by dividend history:
- The Dividend Aristocrats: S&P 500 dividend stocks with 25+ years of consecutive dividend increases.
- The Dividend Achievers: dividend stocks with 10+ years of consecutive dividend increases.
- The Dividend Kings: considered to be the best-of-the-best when it comes to dividend history, the Dividend Kings are a group of dividend stocks with 50+ years of consecutive dividend increases.
Another way to screen the investable universe is by looking for dividend stocks with particular yield or payout characteristics. With that in mind, Sure Dividend maintains the following stock market databases:
Searching within the major stock market indices can also be fruitful. You can download Excel documents of the constituents of each major stock market index below:
Alternatively, you may be interested in searching the stock market by sector. Sector-specific stock market databases are available for download below:
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