The stock dividend has long been a bastion for the wealthy. Typically, the sorts of well-established companies offering a strong dividend have share prices that make them prohibitively expensive for the retail investor. Those investors interested in culling the ranks of the lower priced shares typically aren’t thinking they’re going to find a strong dividend.
This perception, though, isn’t entirely accurate. While lower share prices can sometimes lead to greater volatility, they also make buying into a company more affordable and offer a chance to make a small investment and reduce the risk it represents to one’s portfolio. Here are five companies that have share prices (as of market close on Thursday) lower than $5 and still offer a strong dividend.
MCG Capital Corporation (MCGC)
Market Cap: $320.13 million Share Price: $4.16 Dividend Yield: 16.35 percent
MCG Capital is a commercial finance company that is internally managed, closed end, and non-diversified. MCG provides capital to be used in value-creation strategies and supporting growth in small and middle market companies. The company hopes to offer the companies it invests in through an in-depth understanding off the business requirements for every company in its portfolio. Any dividend north of 15 percent should probably raise serious questions about its sustainability, but the potential rewards of holding a stock like this over time should the dividend hold up are clear.
Frontier Communications (FTR)
Market Cap: $4.17 billion Share Price: $4.20 Dividend Yield: 9.54 percent
Telecom has long been the home to some of the best dividends on the market, and Frontier is not bucking that trend. Frontier is one of the biggest carriers of local exchanges in rural areas, and it also provides local and long distance telephone services, digital television, and broadband internet. Frontier also has some other strong valuations for interested investors, with P/B and P/S ratios that are both under one.
United Online (UNTD)
Market Cap: $423.73 million Share Price: $4.70 Dividend Yield: 8.51 percent
United Online is a provider of consumer goods via the internet through a wide brand portfolio that includes FTD, Interflora, Memory Lane, Classmates, StayFriends, NetZero and MyPoints. United Online is operating in the online retail segment, an industry that most see as being a growth industry, and it also has a share price that should be appealing for reasons under than its being under $5. United Online offers a number of valuations that point towards the stock being attractively priced, including a P/E of 8.39, a Forward P/E of 13.82, a PEG of 0.56, a P/S of 0.47, a P/B of 0.88, and a P/FCF of 9.20.
GFI Group (GFIG)
Market Cap: $405.74 million Share Price: $3.40 Dividend Yield: 5.88 percent
It’s a fairly steep drop off to GFI Group in terms of its dividend yield, but this brokerage company is still offering a very health yield at 5.88 percent. Headquartered in New York, NY, GFI Group is a global company offering institutional customers trade execution, brokerage services, trading platforms, market data, and other software products. The company’s P/S of 0.40 and P/B of 0.89 could mean that GFI Group’s very attractively priced given its dividend and underlying value.
First Busey Corporation (BUSE)
Market Cap: $406.25 million Share Price: $4.69 Dividend Yield: 3.41 percent
First Busey is a financial holding company offering a variety of financial services through non-banking and banking subsidiaries in Illinois, Florida, Indiana and Missouri. The company’s dividend may seem puny when compared to the other companies on this list, but it’s still strong and is paired with a P/B ratio under one and a very attractive P/FCF of just 4.29.
