It's quite possible that dividend investors will find themselves looking at low-priced stocks—those below mental thresholds such as $10 or $20 per share—for a few reasons.
First, these could be companies that have watched their shares fall below these levels, which could lift their dividend yields to interesting heights. It's also possible that a low-priced dividend stock belongs to an under-the-radar company looking to drum up investor interest with its yield and per-share price tag.
Either way, dividend investors considering low-priced stocks need to make sure they're thinking about a few important things, and in today's video, Ryan McQueeney uses two interesting companies—Steelcase SCS and Buckle BKE—to illustrate those points.
Steelcase is probably an example of the latter situation. This office furniture maker is good at what it does, no doubt. But at just $2 billion in market cap and relatively low volume, it's far from the most talked about stock. Still, with a price of under $20 per share and an annual dividend yielding 3.3%, SCS is likely to attract certain types of investors.
Buckle, on the other hand, is a stock that is only now low-priced because of its sluggish performance over the past several years. Shares are trading at under $20 and the dividend payment is yielding over 5.7%.
Regardless, Ryan approaches both of these stocks with the same basic technique. He explores their earnings estimates and positive estimate revision trends, which helped each stock earn a buy rating from the Zacks Rank. Ryan also takes a look at the Price & Consensus chart to show how the stocks are moving with their earnings estimates.
With those fundamentals in check, Ryan explores the dividends specifically. This is where SCS and BKE start to look even more different. Steelcase hasn't quite notched consistent momentum recently, but it has been able to improve its dividend annually. Buckle's full dividend fluctuates, and the yield has increased because share prices have come down in the past half decade.
Ryan also explores the payout ratio of these companies. The payout ratio examines what percentage of a stock's yearly EPS figure is used to pay the dividend. It's a great way to read whether the company is straining to pay its shareholders, or if its dividend is comfortable.
Want to hear more about SCS, BKE, and the concept of investing in low-priced dividend stocks? Make sure to check out today's video!
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Steelcase Inc. (SCS) : Free Stock Analysis Report
Buckle, Inc. (The) (BKE) : Free Stock Analysis Report
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