In this article, we will delve into the world of high-dividend penny stocks and explore why dividend stocks are gaining popularity once again. With major tech companies now rewarding investors with dividends, many are turning back to classical investing strategies that prioritize dividend-paying companies.
Historically, dividends have accounted for a significant portion of total annualized returns, showcasing the importance of investing in companies that pay dividends. In times of economic uncertainty, mature dividend stocks like Johnson & Johnson, Procter & Gamble, and Exxon Mobil have provided investors with downside protection.
Even amidst the rise of growth companies and non-dividend-paying stocks, data shows that dividend stocks have outperformed in down markets. Dividend investing has become a strategic choice for many investors looking to manage risks and secure steady returns.
Top technology companies, including Alphabet, Meta Platforms, Salesforce, and Booking, have recently announced dividends, signaling a shift towards rewarding shareholders with dividends. While some companies still prefer buybacks, the trend is moving towards dividends as a means of shareholder reward.
Despite the perception of penny stocks as risky investments, there are high-quality penny stocks with attractive dividend yields that are favored by hedge funds. In this article, we highlight 11 penny stocks trading under $5 with dividend yields of 5% or higher, chosen based on the number of hedge fund investors.
Among the highlighted penny stocks are Great Ajax Corp, Companhia Energetica Minas Gerais ADR, B2Gold Corp, and Entravision Communications Corp. These companies offer high dividend yields and have garnered interest from hedge fund investors for their potential returns.
As investors navigate through market uncertainties, high-dividend penny stocks present an opportunity for those seeking income-generating investments with the potential for long-term growth. By considering the dividend-paying potential of these penny stocks, investors can build a diversified portfolio that balances risk and reward in today’s market environment. The dividend yield for Entravision Communications Corp (NYSE:EVC) stands at about 7%, and as of the end of 2023, there were 15 hedge funds holding stakes in the company. In the first quarter, the company reported a GAAP EPS of -$0.55, missing estimates by $0.46. However, revenue saw a significant increase of 16.1% year over year, reaching $277.45 million, surpassing estimates by $6.45 million.
Braemar Hotels & Resorts (NYSE:BHR), a Texas-based hotels and resorts REIT, is another high-yield dividend penny stock favored by hedge funds. The stock offers a dividend yield of around 7%. In the first quarter, Braemar Hotels & Resorts reported an FFO of $0.42, beating Wall Street estimates by $0.07. Revenue also showed growth, increasing by about 1.8% year over year to $219.08 million, exceeding estimates by $8.4 million. At the end of the last quarter of 2023, 15 hedge funds disclosed stakes in Braemar Hotels & Resorts, with notable investors like Highland Capital Management, Davidson Kempner, and Jones Road Capital Management.
Banco Bradesco SA (NYSE:BBD), a Brazilian financial services company, boasts a dividend yield of over 8% and a PE ratio just over 9 as of May 14. With revenue totaling R$28 billion and net income from operations at R$4 billion in the first quarter, Banco Bradesco SA is considered one of the top high-dividend penny stocks by hedge funds. Insider Monkey’s database reveals that 16 funds held stakes in Banco Bradesco SA as of the end of 2023, with Ken Fisher’s Fisher Asset Management owning the largest stake at $187 million.
Nordic American Tankers Ltd (NYSE:NAT), an oil tanker company headquartered in Bermuda, is a popular high-yield dividend stock among elite money managers. In February, the company doubled its dividend to $0.12 per share, rewarding investors. As of the end of 2023, 16 hedge funds had stakes in Nordic American Tankers Ltd, with significant investments from Two Sigma Advisors, LMR Partners, and Millennium Management.