The Dividend Survival Kit: 7 Stocks Under $50 to Buy for Lifelong Income

Stocks to buy

Income and capital appreciation. It’s a powerful combination for building a portfolio to carry you through retirement. Investors know the S&P 500 has returned around 10.5% a year going all the way back to 1930 but the asset managers at Hartford Funds found that dividends contributed 40% to the benchmark’s total return.

That makes dividend stock investing a smart strategy. Studies show that dividend stocks outperform all non-income generating stocks and all other asset classes, better than bonds, oil and gold. 

While price doesn’t necessarily indicate a better investment, it is easier for a $50 stock to move to $100 than a $500 one to go to $1,000 even though both are doubling in value. With that in mind, below are seven excellent dividend stocks under $50 to buy for your portfolio today.

Antero Midstream (AM)

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Natural gas stock Antero Midstream (NYSE:AM) owns and operates gathering pipelines, compressor stations and processing and fractionation plants, which separate hydrocarbon mixtures from natural gas into individual products in the Appalachian Basin. While it focuses on processing and gathering, as well as water handling services, most of its business is conducted for its parent company, Antero Resources (NYSE:AR), an independent oil and gas company.

The midstream operator, though, has made a specialty out of using bolt-on acquisitions to grow and become financially lean. By buying highly accretive businesses, Antero Midstream is able to grow free cash flow (FCF). It just racked up its seventh consecutive quarter of positive free cash flow after paying dividends and used the balance to pay down debt and buy more businesses.

As a result, Antero is approaching its 3x target leverage range one-and-a-half years ahead of schedule. And earlier this month it just announced another bolt-on acquisition. It is buying the  gathering and compression assets in the Marcellus Shale region from Summit Midstream Partners (NYSE:SMLP) for $70 million.

With a dividend yielding 6% annually, Antero Midstream stock is attractive priced.

Flowers Foods (FLO)

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Flowers Foods (NYSE:FLO) is the second-largest bakery in the U.S. behind privately held Bimbo Bakeries It owns some of the most well-known bread and cake brands like Wonder and Tastykake. Sales last year rose to a record $5 billion, up almost 6% year- over-year. Its Dave’s Killer Bread brand racked up over $1 billion in sales in 2023.

It was a remarkable achievement because of the incessant draw of inflation, which pressured consumers to opt for cheaper, lower-priced bread options. But now that Flowers Foods thinks prices will ease, at least in terms of commodity costs, along with raising prices to offset inflation’s effect, profits should continue expanding.

Flowers Foods is a 100-year-old company that has operated through numerous business cycles and economic conditions. Having weathered several world wars, depressions and recessions, as well as a global pandemic, it has proved it can survive and thrive in challenging conditions.

The bakery pays a dividend that yields 3.8% annually. And despite its stock dropping after reporting first quarter results last week, management reiterated its full-year outlook. That suggests Flower Foods stock is as tasty as its cakes.

Corning (GLW)

Source: Corning

Although Corning (NYSE:GLW) saw sales drop 6% in the first quarter, the materials company is on the cusp of a new cycle of growth. Where its optical communications segment sales (its largest business) dropped 17% from the year-ago period, they jumped 3% sequentially. Telecom companies are starting to place more orders for optical fiber again and should steadily increase going forward.

Corning has been in business for 170 years and over that time has metamorphosed its business to meet changing end market needs. That’s why it is now the leader in fiber optic cable while its Gorilla Glass for mobile devices and computers is far and away the top product in the space. It takes a lot of research and development to create important products and Corning spends over $1 billion a year on R&D.

The market is beginning to realize its returning potential. Corning stock is up 16% this year and some 40% above the lows it hit in October 2023. The dividend yields 3.2% and it has grown the payout at nearly 11% annually for the past 10 years.

Northwest Natural (NWN)

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While utilities were hit harder than most by the Federal Reserve’s high-interest rate policies, natural gas provider Northwest Natural (NYSE:NWN) has been more resilient. While providing gas services for the Pacific Northwest states of Oregon and Washington it owns a combination of distribution pipelines, transmission lines and service lines. It also has several storage facilities possessing billions of gallons of capacity. Northwest additionally provides water service in Texas and Arizona.

The utility’s recent earnings missed analyst projections but offered guidance that was well ahead of forecasts. It suggests that rates are finally reflecting its costs and that the promise of eventual interest rate reductions will provide a tailwind.

Because of the fixed nature of a utility’s business, higher interest rates cause expenses to rise. Unlike other companies that can raise prices at will, regulated utilities need to get approval before they raise their prices. That typically results in an earnings lag but Northwest Natural is now getting up to speed.

The utility has been in business for over 160 years and has raised its dividend for nearly 70 years. That makes it a Dividend King and a stock worth owning for the long haul.

AT&T (T)

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Telecom giant AT&T (NYSE:T) had also been dividend royalty but lost its status last year when it slashed its payout in half following the spinoff of its entertainment unit into Warner Media Discovery (NASDAQ:WBD). The dividend still yields a lucrative 6.4% annually. While it had previously raised the dividend for 36 consecutive years it may not raise it again, at least not right away, but that’s okay.

Ma Bell is focused on improving its financial situation by focusing on its telecom business. The benefits are already accruing. Operating income rose 3% in the first quarter to $6.5 billion and EBITDA hit $9 billion, a $536 million year-over-year increase. It also generated $16.8 billion in FCF last year and a whopping $3.1 billion this quarter, far outrunning Wall Street’s expectations of just $2.4 billion. The telecom expects to produce between $17 billion and $18 billion in 2024.

VICI Properties (VICI)

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Real estate investment trust (REIT) Vici Properties (NYSE:VICI) was created in 2017 as a result of being spun off from casino operator Caesars Entertainment (NASDAQ:CZR). Focused on owning the real estate Caesars casinos sit on, it also owns MGM International‘s (NYSE:MGM) MGM Grand real estate in Las Vegas.

Of course, as a REIT, it is required to return almost all of its profits to investors. Its dividend yields a healthy 5.4% annually. It also throws off a lot of excess cash, producing almost $2.2 billion last year. Vici Properties has grown FCF at a 43% CAGR over the last five years while growing the dividend at a 7% CAGR. That suggests it ought to be able to keep increasing the payout at a good clip for years to come.

As one of two casino-oriented REITs, it is benefiting from the ongoing growth in the gambling industry. Visitors to Las Vegas in the first quarter were up 3% year-over-year. However, revenue was down slightly to $1.12 billion, a less than 1% decline. It was a good start to the year and should pick up from here.

York Water (YORW)

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Pennsylvania water utility York Water (NASDAQ:YORW) knows a thing or two about paying dividends. It made its first dividend payment 208 years ago and never stopped. York is the oldest investor-owned utility. No company on the market has a longer dividend payment track record than York.

Yet like Northwest Natural, it is finally able to make headway in the high interest rate environment. It reported earnings of 30 cents per share on revenue of $17.6 million, beating Wall Street estimates of 29 cents and $17 million, respectively.

After a long delay, York Water realized in May 2023 the rate increase it had requested. It also added new customers to its base helping to increase revenue. However, that was offset by the Pennsylvania Public Utility Commission resetting to zero the Distribution System Improvement Charge (DSIC). That a fee water utilities collect from customers to replace aging infrastructure.

Utility investing is a constant ebb and flow of rate increase allowances. That means they won’t be rocketships in your portfolio. Instead, they offer a reliable, steady stream of income. And York Water’s centuries-old dividend policy indicates there is no better dividend payer around.

On the date of publication, Rich Duprey held a LONG position in T, WBD and NWN stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Rich Duprey has written about stocks and investing for the past 20 years. His articles have appeared on Nasdaq.com, The Motley Fool, and Yahoo! Finance, and he has been referenced by U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, USA Today, Milwaukee Journal Sentinel, Cheddar News, The Boston Globe, L’Express, and numerous other news outlets.

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