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10 Cheap Dividend Stocks that Will Help You Retire Before 40

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·10 min read
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  • WMB
  • NYCB
  • HRB
  • KMB
  • UNM
  • WU
  • KW
  • BMY
  • ^GSPC

In this article, we will be taking a look at 10 cheap dividend stocks that will help you retire before 40. To skip our detailed analysis of these stocks, you can go directly to see the 5 Cheap Dividend Stocks that Will Help You Retire Before 40.

Perhaps one of the main reasons one chooses to invest in dividend stocks is to set up a passive income stream to get them through their retirement safely and comfortably. Many investors are reliant on dividend income to meet their financial needs after retirement, and for good reason. With the tendency of dividend stocks to often outperform the market, especially in bear markets, and to contribute extensively to the total return of the S&P 500, for instance, they are good investment opportunities for those looking to earn a stable and consistent income throughout their lives. As such, stocks like Bristol-Myers Squibb Company (NYSE: BMY), JPMorgan Chase & Co. (NYSE: JPM), Kimberley-Clark Corporation (NYSE: KMB), and The Williams Companies, Inc. (NYSE: WMB) and other dividend stocks are among some of the most popular and reliable investments in the market today.

To build the case for dividend stocks as better investment options in comparison to non-dividend payers, let's look at data compiled and published by Ned Davis Research, and cited by Hartford Funds. The research showed that since 1973, companies that have paid dividend and grown their dividend yields have seen higher returns when compared to other stocks. Additionally, companies that cut their dividends witnessed negative repercussions in the aftermath, including higher volatility, measured by beta and standard deviation.

Between 1973 and 2020, it was thus estimated that dividend growers and initiators witnessed returns of 13.20%. Those companies that paid stable dividends without growing them brought in returns of about 12.83%. Companies that paid no dividends at all brought in about 12.18% in returns during the same time period, in comparison. Finally, those companies that cut or eliminated their dividends had returns of 10.20% and the S&P 500's returns were about 12.57%. In the end, it was made clear that companies either paying or paying and growing their dividends managed to perform better than all others studied in the research.

Investing has become difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Photo by Zach Betten on Unsplash

Without further ado, let's take a look at the 10 cheap dividend stocks that will help you retire before 40.

Our Methodology

Insider Monkey tracks the data of about 873 hedge funds, and we have used this data to pick dividend stocks that are highly popular among hedge funds today. For each stock we have mentioned its yield and the number of hedge fund holders holding a stake in it, ranking them from the lowest to the highest yield. Each stock is also worth about $25 or under. Finally, we have used analysts' ratings to determine which stocks are favorably placed in analyst and investor circles, picking stocks with mostly positive ratings and strong fundamentals.

Cheap Dividend Stocks that Will Help You Retire Before 40

10. Kennedy-Wilson Holdings, Inc. (NYSE: KW)

Number of Hedge Fund Holders: 18 Dividend Yield: 4.2%

Stock Price as of August 23: $21.26

Kennedy-Wilson Holdings, Inc. (NYSE: KW), a real estate investment company, owns, operates, and invests in real estate itself and through its investment management platform. The company focuses on multifamily and office properties in the US, the UK, Ireland, Spain, Italy, and Japan. It ranks 10th on our list of cheap dividend stocks that will help you retire before 40.

In the second quarter of 2021, Kennedy-Wilson Holdings, Inc. (NYSE: KW) had an EPS of $1.53, beating estimates by $0.38. The company's revenue was $108.4 million, up 1.4% year over year and beating the previous quarter's revenue of $99.4 million. Kennedy-Wilson Holdings, Inc. (NYSE: KW) has gained 15.24% in the past 6 months and 19.71% year to date.

By the end of the second quarter of 2021, 18 hedge funds out of the 873 tracked by Insider Monkey held stakes in Kennedy-Wilson Holdings, Inc. (NYSE: KW) worth roughly $487 million. This is compared to 16 hedge funds in the previous quarter with a total stake value of approximately $499 million.

Like Bristol-Myers Squibb Company (NYSE: BMY), JPMorgan Chase & Co. (NYSE: JPM), Kimberley-Clark Corporation (NYSE: KMB), and The Williams Companies, Inc. (NYSE: WMB), Kennedy-Wilson Holdings, Inc. (NYSE: KW) is a good stock to invest in.

9. H&R Block, Inc. (NYSE: HRB)

Number of Hedge Fund Holders: 30 Dividend Yield: 4.27%

Stock Price as of August 23: $25.48

H&R Block, Inc. (NYSE: HRB) is a provider of assisted income tax return preparation and do-it-yourself tax return preparation services and products to consumers in the US. The company ranks 9th on our list of cheap dividend stocks that will help you retire before 40, and operates through its system of retail offices overseen directly by the company or its franchisees.

This May, BMO Capital's Jeffrey Silber raised his price target on shares of H&R Block, Inc. (NYSE: HRB) from $21 to $26. The analyst also reiterated a Market Perform rating on the stock at the same time.

In the fiscal fourth quarter of 2021, H&R Block, Inc. (NYSE: HRB) had an EPS of $5.16, beating estimates by $0.10. The company's revenue was $2.33 billion, up 28.67% year over year and beating estimates by $5.75 million. H&R Block, Inc. (NYSE: HRB) has gained 30.18% in the past 6 months and 61.69% year to date.

By the end of the second quarter of 2021, 30 hedge funds out of the 873 tracked by Insider Monkey held stakes in H&R Block, Inc. (NYSE: HRB) worth roughly $229 million. This is compared to 27 hedge funds in the previous quarter with a total stake value of approximately $228 million.

Like Bristol-Myers Squibb Company (NYSE: BMY), JPMorgan Chase & Co. (NYSE: JPM), Kimberley-Clark Corporation (NYSE: KMB), and The Williams Companies, Inc. (NYSE: WMB), H&R Block, Inc. (NYSE: HRB) is a good stock to invest in.

8. The Western Union Company (NYSE: WU)

Number of Hedge Fund Holders: 31 Dividend Yield: 4.34%

Stock Price as of August 23: $21.61

The Western Union Company (NYSE: WU) is a financial services company offering money movement and payment services to consumers across the globe. The company operates through its Consumer-to-Consumer and Business Solutions segments. It ranks 8th on our list of cheap dividend stocks that will help you retire before 40.

This July, James Friedman, an analyst at Susquehanna, reiterated a Neutral rating on shares of The Western Union Company (NYSE: WU), alongside a $26 price target.

In the second quarter of 2021, The Western Union Company (NYSE: WU) had an EPS of $0.55, beating estimates by $0.08. The company's revenue was $1.29 billion, up 15.7% year over year and beating estimates by $37.03 million.

By the end of the second quarter of 2021, 31 hedge funds out of the 873 tracked by Insider Monkey held stakes in The Western Union Company (NYSE: WU) worth roughly $369 million. This is compared to 28 hedge funds in the previous quarter with a total stake value of approximately $410 million.

Like Bristol-Myers Squibb Company (NYSE: BMY), JPMorgan Chase & Co. (NYSE: JPM), Kimberley-Clark Corporation (NYSE: KMB), and The Williams Companies, Inc. (NYSE: WMB), The Western Union Company (NYSE: WU) is a good stock to invest in.

7. Unum Group (NYSE: UNM)

Number of Hedge Fund Holders: 23 Dividend Yield: 4.74%

Stock Price as of August 23: $25.43

Unum Group (NYSE: UNM) is yet another financial services company on our list of cheap dividend stocks that will help you retire before 40. The company offers financial protection benefit solutions in the US, the UK, and Poland, and ranks 7th on our list. Some of its provided products include group long-term and short-term disability, group life, and accidental death and dismemberment products.

This April, JPMorgan's Jimmy Bhullar raised his price target on shares of Unum Group (NYSE: UNM) from $24 to $29. The analyst also reiterated his Neutral rating on the stock.

In the second quarter of 2021, Unum Group (NYSE: UNM) had an EPS of $1.39, beating estimates by $0.27. The company's revenue was $2.99 billion, up 0.16% year over year and beating estimates by $32.02 million. Unum Group (NYSE: UNM) has gained 14.49% year to date and 40.50% in the past year.

By the end of the second quarter of 2021, 23 hedge funds out of the 873 tracked by Insider Monkey held stakes in Unum Group (NYSE: UNM) worth roughly $324 million. This is compared to 33 hedge funds in the previous quarter with a total stake value of approximately $283 million.

Like Bristol-Myers Squibb Company (NYSE: BMY), JPMorgan Chase & Co. (NYSE: JPM), Kimberley-Clark Corporation (NYSE: KMB), and The Williams Companies, Inc. (NYSE: WMB), Unum Group (NYSE: UNM) is a good stock to invest in.

6. New York Community Bancorp, Inc. (NYSE: NYCB)

Number of Hedge Fund Holders: 30 Dividend Yield: 5.63%

Stock Price as of August 23: $12.31

New York Community Bancorp, Inc. (NYSE: NYCB), the bank holding company for the New York Community Bank, ranks 6th on our list of cheap dividend stocks that will help you retire before 40. New York Community Bank offers banking products and services in Arizona, Ohio, Florida, and other areas. The company itself offers loan products, annuities, life and long-term care insurance products, and mutual funds, among other products and services.

Meng Jiao, an analyst at Deutsche Bank, raised the firm's price target on shares of New York Community Bancorp, Inc. (NYSE: NYCB) from $11.50 to $15 this May, while reiterating a Hold rating on the stock too.

In the second quarter of 2021, New York Community Bancorp, Inc. (NYSE: NYCB) had an EPS of $0.33, beating estimates by $0.03. The company's revenue was $347 million, up 23.38% year over year and beating estimates by $12.69 million. New York Community Bancorp, Inc. (NYSE: NYCB) has gained 15.05% year to date and 30.31% in the past year.

By the end of the second quarter of 2021, 30 hedge funds out of the 873 tracked by Insider Monkey held stakes in New York Community Bancorp, Inc. (NYSE: NYCB) worth roughly $393 million. This is compared to 25 hedge funds in the previous quarter with a total stake value of approximately $329 million.

Like Bristol-Myers Squibb Company (NYSE: BMY), JPMorgan Chase & Co. (NYSE: JPM), Kimberley-Clark Corporation (NYSE: KMB), and The Williams Companies, Inc. (NYSE: WMB), New York Community Bancorp, Inc. (NYSE: NYCB) is a good stock to invest in.

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Disclosure: None. 10 Cheap Dividend Stocks that Will Help You Retire Before 40 is originally published on Insider Monkey.