We recently compiled a list of the 10 Best Dividend-Paying Stocks Under $15. In this article, we are going to take a look at where Krispy Kreme, Inc. (NYSE:DNUT) stands against the other dividend-paying stocks under $15.
During the bull market driven by the “Magnificent Seven” stocks, dividend stocks lagged in performance. Since the beginning of 2024, the Dividend Aristocrats Index has increased by only 5.50%, while the Nasdaq has risen by 13.6%. That said, the performance of tech stocks becomes less significant when considering the long-term returns of dividend stocks. Dividend-paying stocks with strong balance sheets and stable yields can offer investors consistent income, protection against market declines, and steady growth for their investments.
When investing in dividend stocks, it might seem logical to invest in stocks with the highest yields. However, according to analysts, concentrating solely on yield may not be the most effective investment approach. Not all dividend yields are equally secure, as companies under financial strain may suspend or cut their dividend payments. Therefore, investors are encouraged to prioritize the sustainability of dividends and, if possible, seek out companies with a track record of dividend growth. To know more about strong dividend payers, have a look at Best Dividend Stocks of All Time.
Historically, companies that consistently grow their dividends have outperformed those that do not pay dividends, while also exhibiting less volatility. Although dividends are not guaranteed and can fluctuate, just like in today’s time, they have played a major role in equity total returns over the decades. From 1930 to 2023, dividends and their reinvestment accounted for 40% of the annualized total return of the broader market, with the remaining return coming from capital appreciation.
Companies globally are distributing record dividends to shareholders, largely due to their robust balance sheets. With companies holding near-record levels of cash and liquid assets, they are increasingly returning this cash to investors through dividends. Global dividends grew from $1.23 trillion in 2020 to $1.66 trillion in 2023, according to a report by Janus Henderson. The firm forecasts total dividends to reach $1.72 trillion for 2024, up 3.9% on a headline basis.
A company’s dividend payout ratio is an important measure of how flexible its dividend policy is. Firms that only earn enough to cover their dividends or pay out most of their earnings as dividends might face risks from competitive pressures, as their cash flow may not be adequate to sustain operations. Moreover, companies with high dividend yields or, more critically, high payout ratios might be at risk of limited future growth, which could impact both share price appreciation and the potential for increasing dividends. According to data collected by Nuveen, stocks with the highest payout ratios have not been the strongest long-term performers. Over the past 20 years, companies with medium and medium-high payout ratios that paid dividends have generally delivered better performance.
Consistently growing dividends is a challenging target, as it requires companies to be financially very stable. For companies that are still in the growth phase and have lower share prices, evaluating dividend sustainability becomes a straightforward metric to consider. In this article, we will take a look at some of the best dividend stocks under $15.
Our Methodology:
For this list, we used a Finviz stock screener to find dividend stocks trading below $15 as of the close of July 31. From the initial list, we narrowed down the selection to companies that pay regular dividends to shareholders and possess strong dividend policies, ensuring consistent future dividends. From the resultant list, we picked 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s Q1 2024 database of 920 hedge funds and their holdings. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
An employee of the grocery store happily decorating doughnuts with colorful icing.
Krispy Kreme, Inc. (NYSE:DNUT)
Number of Hedge Fund Holders: 13
Share Price as of the Close of July 31: $10.03
Krispy Kreme, Inc. (NYSE:DNUT) ranks seventh on our list of the best dividend stocks under $15. The North Carolina-based company is one of the most popular donut chains in the world. The stock reached its peak for the year in March, trading at around $17 per share, following the company’s announcement of a groundbreaking partnership with McDonald’s. This collaboration is set to greatly expand the doughnut franchise’s reach, as there are approximately 13,500 McDonald’s locations in the U.S., compared to fewer than 400 Krispy Kreme, Inc. (NYSE:DNUT) outlets. Currently, the bakery’s donuts are also available through nearly 7,000 third-party locations. According to the deal, three classic Krispy Kreme donuts will gradually be offered at McDonald’s locations, with the goal of making them available across the entire store network by the end of 2026. In addition to this, the company also announced its expansion in Spain in 2025.
Krispy Kreme, Inc. (NYSE:DNUT) reported strong earnings in the first quarter of 2024. It posted a revenue of $442.7 million, which showed a 5.67% growth from the same period last year. The results surpassed expectations, fueled by higher digital sales and robust consumer demand. This was underscored by a record-setting Valentine’s Day, during which specialty doughnuts were offered in 33 countries worldwide. The company’s strategy of expanding the global availability of fresh Krispy Kreme donuts is yielding impressive results.
Krispy Kreme, Inc. (NYSE:DNUT) initiated its dividend policy in 2021 and has paid regular dividends to shareholders since then. The company offers a quarterly dividend of $0.035 per share and has a dividend yield of 1.35%, as of August 1.
The number of hedge funds holding stakes in Krispy Kreme, Inc. (NYSE:DNUT) jumped to 13 in Q1 2024, from 8 in the previous quarter, according to Insider Monkey’s database. The stakes owned by these hedge funds have a collective value of over $60.8 million.
Overall DNUT ranks 7th on our list of the best dividend-paying stocks to buy under $15. You can visit 10 Best Dividend-Paying Stocks Under $15 to see the other dividend-paying stocks that are on hedge funds’ radar. While we acknowledge the potential of DNUT as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued dividend stock that is more promising than DNUT but that trades at less than 7 times its earnings and yields nearly 10%, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.