Stocks trading for under $20 tend to be more established than their penny stock counterparts which trade for under $5. Yet, they also offer growth potential along with that increased stability. While not as dependable as the revered dividend aristocrats, all three of these 5% dividend stocks will generate passive income for your portfolio.
They offer a compelling mix of growth potential and income through those dividends that can combine to create impressive returns overall. Let’s take a look at those three 5% dividend stocks.
AT&T (T)
AT&T (NYSE:T) is going to continue to make sense for investors who believe in the company’s future growth. The well-known cell and data telecom firm is essentially stagnating but continues to be full of promise.
That means that when AT&T releases earnings that fail to impress, but also don’t disappoint, that there is reason to invest. Which is essentially what happened when AT&T released earnings in late January. There were bright spots and some not so bright spots. Revenues were higher than expected and the company added significantly more postpaid customers than was anticipated. Yet, AT&T missed earnings by a few cents.
Investors who stick with AT&T as it navigates the evolving wireless landscape will be rewarded with a dividend yielding 6.5%.
Ambev (ABEV)
There are a lot of metrics to suggest that Ambev (NYSE:ABEV) stock deserves a place in your portfolio. Its shares are very cheap and currently trade for roughly $2.50. However, the analysts with coverage of Ambev believe it can run as high as $5 per share and give it a consensus target price of $3.43. The stock includes a dividend yielding just above 5%. It’s easy to see why investors are interested in Ambev due to the combination of price appreciation and income.
Investors who are looking for an investment in the brewery sector could do much worse than Ambev.The company has momentum in its favor and is ranked higher than 79% of competitors in the brewery beverages sector.
Beyond that, Ambev is financially secure overall and particularly skilled at creating value. The company has grown its revenues quite rapidly over the past 3 years. Additionally, Ambev is quite cheap based on its P/E ratio.
Kinder Morgan (KMI)
Kinder Morgan (NYSE:KMI) is among the better known midstream energy stocks available to investors. The company operates pipeline transportation infrastructure critical to the energy industry.
The company’s current dividend yields 6.8% and the company expects it to continue yielding above 6% in 2024. KMI has stated that it anticipates paying $1.15 per share in dividends during this year.
One of the most compelling reasons to consider investing in Kinder Morgan in 2024 is underlying uncertainty in the energy markets. Kinder Morgan expects the price of West Texas intermediate to average $82 in 2024. However, geopolitical instability could result in higher energy prices than the company anticipates. That would obviously be a benefit to Kinder Morgan and would improve its top and bottom line results.
Kinder Morgan’s Earnings and distributable cash flow declined by 10% and 4%, respectively in the fourth quarter. Investors who put their money behind Kinder Morgan are clearly betting on instability pushing energy prices higher while also banking dividend income from KMI.
On the date of publication, Alex Sirois 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.