Dividend Stocks Under $50 to Consider in 2023

Dividend stocks are a great way to generate income from your investments while also benefiting from capital appreciation. However, not all dividend stocks are created equal. Some may offer high yields but low growth prospects, while others may have erratic payouts or poor stock performance.

To help you find the best dividend stocks under $50 in 2023, we have screened for companies that have:

• A current share price below $50: This is an arbitrary threshold, but it helps us focus on stocks that are more accessible and less expensive than some of the high-priced dividend aristocrats or blue chips.

  
  

• A dividend yield above 2%: This is also a subjective cutoff, but it ensures that we get a decent return on our investment. A yield above 2% is also higher than the average yield of the S&P 500 index, which is currently around 1.3%.

  
  

• A history of increasing dividends for at least 10 years: This shows that the company has a long-term commitment to rewarding shareholders with consistent and growing dividends. It also indicates that the company has a stable and profitable business model that can withstand various economic cycles and competitive pressures.

  
  

• A positive earnings growth rate over the past five years: This demonstrates that the company has been able to grow its earnings over time, which supports its dividend payments and future growth prospects. A positive earnings growth rate also implies that the company has a competitive advantage or a strong market position in its industry.

  
  

• A reasonable payout ratio below 80%: This measures how much of the company’s earnings are paid out as dividends. A lower payout ratio means that the company retains more earnings for reinvestment or debt reduction, which enhances its financial flexibility and sustainability. A higher payout ratio means that the company has less room to grow or maintain its dividends in case of an earnings decline.

Based on these criteria and a few more important ones listed by five of the best dividend stocks under $50 that you can explore right now.

List of best dividend stocks under $50 in 2023

Pfizer (NYSE: PFE)

Pfizer is one of the world's largest pharmaceutical companies, with a diversified portfolio of drugs and vaccines for various therapeutic areas. The company has been in the spotlight for its COVID-19 vaccine, which has generated strong sales and profits in 2021 and 2022.

Pfizer has a long history of paying and growing dividends, with 11 consecutive years of annual increases. The current dividend yield is 4%, and the payout ratio is 54%. The company has also delivered an impressive earnings growth rate of 36% over the past five years.

Pfizer expects to grow its revenue by 6% to 9% annually through 2025, driven by its core products and pipeline opportunities. The company also plans to return more cash to shareholders through dividends and share buybacks.

AT&T (NYSE: T)

AT&T is a leading telecommunications company that provides wireless, broadband, video, and media services to millions of customers. The company also owns WarnerMedia, which includes HBO, CNN, Warner Bros., and other entertainment assets.

AT&T has been paying dividends since 1984 and has increased them for 36 consecutive years. The current dividend yield is a whopping 6%, and the payout ratio is 58%. The company has also grown its earnings by an average of 5% per year over the past five years.

AT&T is undergoing a major transformation as it plans to spin off WarnerMedia and merge it with Discovery (NASDAQ: DISCA) in mid-2023. The deal will create a new media giant that will compete with Netflix (NASDAQ: NFLX) and Disney (NYSE: DIS). AT&T will focus on its core connectivity business and reduce its debt load.

AT&T expects to maintain its dividend at current levels after the spin-off and grow it modestly over time. The company also expects to generate strong free cash flow and invest in its wireless network and fiber broadband expansion.

Texas Instruments (NASDAQ: TXN)

Texas Instruments is one of the world's largest semiconductor companies that designs and manufactures chips for various applications such as industrial equipment, automotive systems, personal electronics, communications devices, and more.

Texas Instruments has been paying dividends since 1962 and has increased them for 18 consecutive years. The current dividend yield is 2.8%, and the payout ratio is only 46%. The company has also achieved an impressive earnings growth rate of 21% per year over the past five years.

Texas Instruments benefits from its diversified end markets, strong competitive position, high-quality products, efficient manufacturing capabilities, and robust cash generation. The company expects to grow its revenue by mid-to-high single digits annually over the long term and return more than 100% of its free cash flow to shareholders through dividends and share buybacks.

Exxon Mobil (NYSE: XOM)

Exxon Mobil is one of the largest oil and gas companies in the world, with operations spanning exploration, production, refining, chemicals and renewables. The company has been recovering from the impact of the COVID-19 pandemic on oil demand and prices, as well as facing pressure from investors and regulators to address climate change risks.

Exxon Mobil has been taking steps to improve its profitability and sustainability by cutting costs, divesting non-core assets, investing in low-carbon technologies and increasing shareholder returns. The company expects to grow its earnings by more than four times by 2027, compared to its pre-pandemic level in 2019, while also reducing its greenhouse gas emissions intensity by up to 20% by 2025.

Exxon Mobil pays a quarterly dividend of $0.87 per share, which translates to an annual yield of about 3.5% at the current stock price. The company has raised its dividend for 39 consecutive years, making it another long-standing dividend aristocrat. Exxon Mobil trades at a fair valuation of 15 times forward earnings, which is slightly above the industry average of 14 times. The company also generates solid cash flow and has a manageable debt-to-equity ratio of 0.8.

Cisco Systems Inc (NASDAQ: CSCO)

Cisco is a leading provider of networking equipment and software for enterprises and consumers. The company has been paying dividends since 2011 and has increased them every year since then. The current dividend yield is 3.05% and the payout ratio is 49%. Cisco has also grown its earnings per share (EPS) by an average of 9.6% annually over the past five years. The stock is trading at $48.19 as of March 22, 2023.

Conclusion

In conclusion, dividend stocks are a reliable way to generate income while benefiting from capital appreciation. However, not all dividend stocks are created equal. To find the best dividend stocks under $50, we have used specific criteria such as a current share price below $50, a dividend yield above 2%, a history of increasing dividends for at least 10 years, a positive earnings growth rate over the past five years, and a reasonable payout ratio below 80%. Based on these criteria, Pfizer, AT&T, Texas Instruments, and Exxon Mobil are some of the best dividend stocks under $50 in 2023. These companies have a long history of paying and growing dividends, a stable and profitable business model, and a strong market position in their respective industries. Moreover, they offer decent dividend yields and a potential for future growth, making them a good investment opportunity for income-seeking investors.

Disclaimer: The information provided in this article is for informational purposes only and should not be construed as professional investment advice. Investing involves risk and you should carefully consider all risks and uncertainties before making any investment decisions. We do not guarantee the accuracy or completeness of the information presented and we are not responsible for any errors or omissions. You should consult with a financial advisor before making any investment decisions.