It doesn’t take (tens of) thousands of dollars to get started with investing. While there are some pretty high-priced stocks out there, like Netflix (NASDAQ:NFLX), that go for more than a grand per share, there are also some pretty great pieces of merchandise out there that go for less than $50 per share.
And while some penny stocks may go for less than a dollar, many tend to be far too risky, especially for beginning investors who are still learning how to analyze the financials of firms. In any case, some pretty impressive blue-chip dividend stocks are attainable for newer, smaller investors who can’t afford to pay hundreds or, in some cases, thousands for a single share or don’t have access to trading partial shares.
Let’s check out three affordable dividend “machines” that sport share prices under $50 with valuations that make them rather intriguing value plays as well.
Key Points
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These under-$50 stocks are intriguing right now, with low betas, high yields, and deep value.
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OXY, KHC, and T stand out as defensive dividend stocks with robust free cash flows and well-supported payouts.
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Occidental Petroleum
First up, we have a terrific Warren Buffett energy stock in Occidental Petroleum (NYSE:OXY). The stock has been steadily declining in recent years, and while OXY stock may not have been the timeliest new Buffett bet, it has been one of his most notable. Only time will tell if Buffett and Berkshire Hathaway (NYSE:BRK-B) will buy more shares at today’s relatively low prices (going for the low-$40s). Either way, I think investors have plenty of reason to pounce on the name while shares trade at 17.7 times trailing price-to-earnings (P/E) to go with a 2.1% dividend yield.
Sure, it’s all too easy to deem that Occidental is a rare blunder on the part of Berkshire. That said, I do think it’s far too early to write off Occidental as a soured bet. Indeed, the opportunity to snag a Buffett stock at a lower price of admission does not come around often. And in the case of Occidental, I do think there’s plenty of value to be had as the firm continues chipping away at its debt load.
Indeed, oil prices may still be in a volatile spot, hovering around $65 per barrel, but the firm remains a significant cash generator, even at these levels. With many analysts forecasting around $4 billion in free cash flow (FCF) in the next two years, I’m inclined to think the stock’s a great deep-value bet, especially after a solid first-quarter showing back in May.
Kraft Heinz
Sticking with the theme of soured Buffett stocks, we have Kraft Heinz (NYSE:KHC), which recently plunged to make new multi-year lows of less than $26 per share. At these depths, shares of the consumer-packaged goods firm yield 6.2%. And with a really low 0.23 beta, the stock is lowly correlated to the rest of the stock market. Undoubtedly, the payout may now be mildly stretched, but it’s still reasonably well-covered by cash flows.
Though 2025 has been another slog for the firm, I’d not look to give up on the name right here while it’s going for just 11.8 times trailing P/E or 9.9 times forward P/E. With a low bar ahead of it and the means to jolt further efficiencies while embracing, perhaps it’s time to give the low-cost, high-yielder the benefit of the doubt.
As the consumer environment becomes a bit more challenging in the second half, the generics could maintain the upper hand in the middle aisle of the supermarket. Still, KHC stock seems cheap enough that such headwinds are likely already well baked in at these prices. Indeed, it’ll take some time for Kraft Heinz to stage a sustainable recovery. But for those with an appetite for a secure yield north of 6%, I’m a fan of the name, which may very well be the cheapest of the Berkshire portfolio these days!
AT&T
Finally, we have shares of recovering telecom titan AT&T (NYSE:T), which trades at $28 and change to go with a 4% dividend yield. Unlike the other two names on this list, AT&T stock has found itself on the ascendency in the past two years, gaining over 80%. After a hot run, the former deep value play now appears more like just another value play.
That said, given impressive free cash flow generation and a share buyback program that could unlock further value for shareholders, I’d not be so quick to turn away from the name. AT&T is back online, and it could stay this way for some time. Add the 0.60 beta into the equation, and AT&T certainly stands out as a good stock to play a bit of defense this summer.
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The post 3 Dividend Machines Under $50 That Could Outperform appeared first on 24/7 Wall St..
