While passive income should be a high priority in your overall investment strategy, acquiring quality names can be expensive, which brings us to low-cost dividend stocks. By moving away from the spotlight, you can find some attractive ideas.
Of course, dividends are like anything. You can find some incredibly high-paying enterprises at the risk of sustainability threats. On the other hand, you can prioritize restful sleep but at the expense of robust yield.
With low-cost dividend stocks, I’m trying to meet you somewhere in the middle: low barrier to entry so to speak but with reasonable quality ideas that you might not have thought of before.
A10 Networks (ATEN)
Operating in the software infrastructure space, A10 Networks (NYSE:ATEN) provides networking solutions in the Americas and other international markets. It provides solutions for various threats, including distributed denial of service (DDoS) defense management. Analysts rate ATEN stock a consensus moderate buy with a $16.50 average price target.
Financially, A10 carries general enthusiasm among Wall Street experts thanks to its reasonably consistent performances. In the trailing four quarters ending in the first quarter of 2024, the average earnings surprise came out to 8.9%. That’s including a Q4 miss when the company’s earnings per share landed a penny short of the 26-cent consensus target.
For passive income, it’s not the most generous yield out there at 1.56%. However, the payout ratio is very reasonable at 39.34%. Further, analysts anticipate EPS of 76 cents on revenue of $263.5 million at the end of this year. Last year, the company posted earnings of 73 cents on sales of $251.7 million. Thanks to steady growth and fundamental pertinence, ATEN ranks among the low-cost dividend stocks.
Marcus (MCS)
Operating in the entertainment industry, Marcus (NYSE:MCS) features two main businesses: owning and operating movie theaters and operating hotels and resorts in the U.S. Currently, only one expert covers MCS with a buy rating. However, since September 2023, five analysts have covered MCS. All of them rate shares a buy, making it a worthwhile idea for low-cost dividend stocks.
I’m particularly interested in the potentially burgeoning relevance of its movie theater business. Yes, the industry itself is struggling. However, Marcus’ box offices are located in more rural areas. These are the same places where millennials have been moving to for cost-of-living reasons. Thus, I see Marcus as being viably positioned.
Right now, Marcus offers a forward annual dividend yield of 2.51%. No, it’s not the highest yield out there. Plus, analysts are anticipating erosion in the top and bottom lines in fiscal 2024. However, one year later, EPS could potentially bounce back to a blue-sky target of 58 cents. Further, consensus revenue calls for $763.7 million, with an optimistic target of $771.5 million.
Smith & Wesson Brands (SWBI)
Straight off the bat, Smith & Wesson Brands (NASDAQ:SWBI) is controversial. However, as we saw with other publicly traded enterprises, a danger exists in ignoring the sentiments of Americans who live away from the coastal (and typically progressive) metropolitan areas. In “real” America, people love their firearms and are incredibly passionate about the shooting sports.
If you’re an ideologically and politically agnostic investor, you can tune into this reality with SWBI stock. Indeed, two analysts currently cover Smith & Wesson, both rating shares a buy. The average price target comes in at $17.
Financially, SWBI can be a bit of a wild card. In the past four quarters, its average earnings beat landed at 12.35%. However, the quarter ended Oct. 31, 2023 saw a bad miss to the tune of a 64.3% negative earnings surprise.
Let’s end on the good stuff. Smith & Wesson offers a 2.95% forward yield. Analysts are also looking for significant growth on the top line to $533.48 million by the end of this year. It’s one of the low-cost dividend stocks to consider.
Elme Communities (ELME)
Structured as a real estate investment trust (REIT), Elme Communities (NYSE:ELME) aims to address the residential needs of middle-income renters. Per its public profile, Elme owns and operates 9,400 apartment homes in the Washington, D.C. metro and the Atlanta, Georgia metro regions.
Fundamentally, Elme might attract investor dollars simply because affordable housing is such a major concern. For that reason, analysts rate shares a consensus moderate buy with a $15.50 average price target. Further, the high-side target lands at $17. Admittedly, these aren’t groundbreaking figures. However, the idea here is the passive income.
Presently, Elme offers a forward yield of 4.72%, which rises above many other dividend payers. To be sure, its payout ratio is sky high, which is a risk. Nevertheless, it’s fair to point out that REITs generally tend to run a hotter ratio than non-REITs.
For fiscal 2024, analysts anticipate a loss per share of six cents on revenue of $238.59 million. Last year, the REIT posted a loss of 61 cents on sales of $227.91 million. For a relevant play, ELME could be an interesting candidate for low-cost dividend stocks.
Apple Hospitality (APLE)
Another publicly traded REIT, Apple Hospitality (NYSE:APLE) owns one of the largest and most diverse portfolios of upscale, rooms-focused hotels in the U.S. Per its corporate profile, Apple’s portfolio consists of 223 hotels with more than 29,400 guest rooms. These are located in 87 markets across 37 states. It’s a relevant idea for low-cost dividend stocks but it’s also risky.
The relevance comes in the form of travel prioritization. While the revenge travel concept may no longer be so acute, people still want to explore. A strong dollar relative to international currencies help. At the same time, Americans are deeply indebted. Further, the labor market has shown some weakness lately, posing risks to APLE stock.
On the passive income side, Apple offers a forward dividend yield of 6.53%. To be sure, the payout ratio is extremely elevated (though it’s not absolutely horrendous for a REIT).
Adding to the confidence boosting, analysts project growth in both the top and bottom lines for the next two years. Therefore, it’s one of the low-cost dividend stocks to consider.
Healthpeak Properties (DOC)
Based in Denver, Colorado, Healthpeak Properties (NYSE:DOC) is a healthcare-oriented REIT. Per its public profile, the company owns, operates and develops high-quality real estate for healthcare discovery and delivery. Analysts dig the idea, pegging shares a consensus moderate buy with a $21.50 average price target. That implies more than 12% upside potential.
Fundamentally, one of the factors that could make Healthpeak intriguing is the general insulation of the key narrative. Unlike cyclical industries, when it comes to healthcare, people need to address issues as they come up. However, the risk for DOC stock specifically is that the financial performance is spotty. Thanks to two big misses in the past four quarters, the average earnings surprise came out to 6% below parity.
On the positive side, Healthpeak is a REIT and offers passive income accordingly. Its forward annual dividend yield stands at 6.27%. Still, the payout ratio is sky high.
To end on a positive, analysts see 21% growth in the top line to $2.64 billion. Further, the blue-sky target calls for $2.85 billion.
FAT Brands (FAT)
Falling under the restaurant brand, FAT Brands (NASDAQ:FAT) is a multi-brand restaurant franchising company. It acquires, develops, markets and manages quick service, fast casual and “polished” casual dining restaurant concepts worldwide. It’s best known for its Fatburger brand, along with other favorites such as Round Table Pizza and Johnny Rockets.
For full disclosure, restaurant sales have slowed down in the latter half of last year. However, it’s also possible that (recent data aside), the robust jobs numbers helped pad discretionary consumer sentiments for low-cost purchases. Granted, the price of everything has risen substantially since prior to the pandemic. Still, consumers are still willing to splurge on smaller luxuries such as fast food and casual dining.
For passive income, FAT Brands entices investors with a 7.52% forward dividend yield. Of course, when you’re dealing with such a high payout, risks exist. Still, analysts are looking for significant growth in fiscal 2024, with sales rising to $650.35 million. That implies a 35.4% lift from 2023’s haul of $480.46 million.
It’s worth keeping on your radar for low-cost dividend stocks.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
