It's fair to assume a great stock is going to cost more than the average stock on a price-to-earnings ratio basis as well as an absolute basis. The highest echelon of companies seems to seek out the stature associated with a sky-high, per-share stock price. Amazon shares, for instance, are priced well above $3,000 currently, while a share of Alphabet currently goes for more than $2,700. Either stock costs more than the average monthly house payment in the U.S.
So what's an investor with less available cash supposed to do?
Well, there is always the option of buying fractional shares. But another good alternative is to plug into a high-quality company with shares priced more to your style. If the great company also happens to be paying a nice dividend, all the better. Here are three great dividend stocks you can buy today for less than $50 per share.
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1. Conagra Brands
Food companies like Conagra Brands (CAG -0.38%) have been struggling of late. Inflation is rampant for food commodities like corn, sugar, and beef, but gasoline and diesel prices have surged as well. The combination of those two related headwinds makes the normally low-margin food business even more challenging. If you were steering clear of Conagra shares last year -- or even selling them -- that decision would be understandable.
The thing is, the food industry has more pricing power than most investors recognized less than a year ago. These companies must still be price-conscious (and aware that their customers are as well), but as CFO Dave Marberger commented last month during Conagra's fiscal 2022 Q2 conference call: "On last quarter's call, we noted that the domestic retail pricing actions were just starting to be reflected on shelves at the end of the first quarter. Those increases were reflected in our P&L this quarter, driving the 6.8% increase in price mix."
Translation: The company is successfully passing its higher costs along to consumers. And management feels confident that price increases planned for the first half of this calendar year will also be absorbed by customers. After all, people have to eat, no matter what food costs.
Some investors are starting to see -- and believe in -- this pricing power. After seeing the price peel back to the tune of 20% in the latter part of 2021, the stock has rallied back quite a bit. But at its current affordable share price of around $35, Conagra's dividend yield is still an above-average 3.5%.
2. Hess Midstream
Hess Midstream LP (HESM 0.33%) may be part of the oil and natural gas industry, but it's a distinctly different business from more familiar names such as ExxonMobil and Chevron. Hess -- as the name plainly says -- is a midstream company that transports, processes, and stores the crude oil and natural gas that other companies extract.
It's an important distinction. While drillers and explorers take a financial risk by developing wells and fields that may not actually produce oil profitably, Hess gets paid the same no matter what commodity prices do. As long as the world keeps using natural gas and oil, and drillers keep producing to meet that need, its services will remain in demand.
For example, despite the massive economic headwind that was blowing in 2020 due to the COVID-19 pandemic, the Energy Information Administration says the U.S. only consumed about 10% less oil in that year than it did in 2019, while natural gas usage barely budged. And consumption of both sources of energy has rebounded, approaching pre-pandemic levels in 2021.
The world will need gas and oil regardless of its price, and Hess Midstream helps get it to where it's needed. You can plug into this proverbial toll road while the stock is priced at around $30 per share, which gives it an incredible dividend yield of 7%.
3. Reynolds Consumer Products
Finally, add Reynolds Consumer Products (REYN -0.50%) to your list of great dividend stocks you can buy for less than $50 a share. It is trading hands at about $29 a share, which gives it an annual yield of 3.2%.
Yes, this is the company that makes Reynolds Wrap, but its portfolio includes a lot more than aluminum foil. Hefty trash bags, Fresh-Lock plastic bags, Presto plastic containers, and a bunch of other kitchen items are all in its lineup.
It's far from an exciting business, but that doesn't make it a bad business to be in. Indeed, there's an advantage to making products that consumers are brand-loyal to and buy over and over again. This translates into reliable revenue, which is exactly what income-minded investors want to see in companies they own.
Reynolds Consumer Products has boasted an amazingly consistent revenue and earnings production profile since it was spun off from Reynolds Group Holdings back in January 2020. Sales have grown every quarter since then, and while earnings contracted on a year-over-year basis during the past couple of reported quarters, consider the circumstances. Those figures are being compared to the latter half of 2020, when people were cooking most of their meals at home, and before inflation soared globally.
And even then, Reynolds earned more on a per-share basis in the last two quarters of 2021 than it paid out in dividends. During that six-month span, the company raked in an operating profit of $0.84 per share, but only dished out $0.46 worth of payments. That leaves it with plenty of wiggle room in the event that it needs to deal with more cost and price volatility.
