3 Cheap Dividend Stocks Under $20 to Buy Now for Coronavirus Volatility

The Dow, the S&P 500, and the Nasdaq all slipped through mid-afternoon trading on Friday after posting three straight days of gains for the first time in a month. In fact, the Dow even technically jumped into a new bull market Thursday, just three days after reaching its bear-market low.

That said, the rapid fall and quick rise highlights the coronavirus volatility that could remain even though the House passed the roughly $2 trillion stimulus package on Friday. The stimulus is set to provide direct payments to Americans, beef up unemployment insurance, provide loans to companies, and extend additional resources to health-care providers.

Along with the $2 trillion stimulus package, the Fed on Monday said it would purchase practically unlimited amounts of government debt to help provide liquidity and extend loans to big and small businesses.

This week’s rally was encouraging and it might signal that the market’s worst days are already behind us. But no one knows, and even if they are it doesn’t mean that investors should jump all the way back in as volatility is likely to remain.

Today we dive into three cheap stocks trading under $20 a share that also pay a dividend that investors might want to buy now.

Barrick Gold Corporation GOLD

Prior Close: $19.58 USD

Barrick is the world’s second-largest gold-mining company by market cap, with gold and copper mining projects in 13 countries. GOLD topped our Q4 earnings and sales estimates in February and it came in at the high end of its gold production guidance for the year. The Toronto-based company also saw its adjusted fiscal 2019 earnings jump 46%, while it halved its net debt.

GOLD upped its latest dividend payment by 40% from the prior quarter to $0.07 per share, which marked its third payout raise in the last year. Barrick’s current dividend yield rests at 1.45% to easily top the 10-year U.S. Treasury’s 0.73%. CFO Graham Shuttleworth said in prepared remarks that the “increase is justified by the significant reduction in net debt and strong balance sheet, together with the growth in free cash flow supported by a robust 5-year plan which we have shared with the market.”

Barrick shares have jumped 40% in the last year and are still up over 2% in the last month amid the market’s selloff. Plus, the price of gold continues to climb and currently hovers at around $1,622—not too far off its recent highs. Our Zacks estimates call for GOLD’s fiscal 2020 revenue to jump 14% to help lift its adjusted EPS figure by another 45%.

Barrick’s strong earnings revisions picture helps it earn a Zacks Rank #2 (Buy) at the moment. GOLD also holds a “B” grade for Growth in our Style Scores system and is part of an industry that rests in the top 9% of our more than 250 Zacks industries—which includes other highly-ranked stocks such as Alamos Gold Inc. AGI and Franco-Nevada Corporation FNV.

HP Inc. HPQ

Prior Close: $17.94 USD

Hewlett-Packard split into Hewlett Packard Enterprise HPE and HP Inc. in 2015. HP’s portfolio is made up of both products and services that include personal systems, mobile devices, printers, 3D printing solutions, and more. HPQ in early March rejected Xerox’s XRX $24-a-share hostile takeover bid. More recently, HP explained that amid the coronavirus downturn “any complex, large-scale, highly leveraged transaction in the current economic environment could be disastrous for HP, its shareholders and our entire ecosystem.”

Shares of HP had raced toward the $24 takeover price in late February but have fallen amid the company’s rejection and the broader downturn. The stock fell all the way to roughly $13 per share last week, but has popped since then. Along with its under $20 price tag, HPQ is trading at 0.45X forward 12-month Zacks sales estimates, which marks a big discount against its industry’s 2.3X average.

On top of that, HP’s dividend yield comes in at 4.11% at the moment, which blows by the S&P 500’s 2.25% average, as well as Qualcomm’s QCOM 3.63% and Oracle’s ORCL 1.91%. HP’s positive earnings revisions help it hold a Zacks Rank #2 (Buy) right now, alongside its overall “A” VGM score. Peeking ahead, the company’s adjusted earnings are projected to jump over 3% in fiscal 2020 and another 18% in 2021, based on our Zacks estimates.

Tesco PLC TSCDY

Prior Close: $8.75 USD

Tesco is a UK multinational grocery powerhouse that seems ready to withstand the coronavirus social distancing push that has hurt non-essential retailers. Last week, Britain's market-leading supermarket chain announced that it would hire 20,000 people to help deal with increased demand, joining the likes of Amazon AMZN and Walmart WMT. Earlier this month, Tesco said that it reached a deal worth more than $10 billion to sell its Asian businesses to Thai billionaire Dhanin Chearavanont.

The company also plans to return roughly $6.6 billion to shareholders after agreeing to the massive deal. Tesco stock has climbed 21% in the last three years but it has been more up and down recently. TSCDY has also traded at a discount against its industry over the last several years. Meanwhile, the company’s 2.28% dividend yield tops Kroger KR and matches the S&P 500’s average.

Tesco’s adjusted fiscal year earnings are projected to surge 22% on the back of roughly 13% stronger sales. The company’s bottom-line is then expected to jump another 12% in the following year. TSCDY is currently a Zacks Rank #3 (Hold) that rocks “A” grades for both Value and Momentum and a “B” for Growth in our Style Scores system.

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HP Inc. (HPQ) : Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Walmart Inc. (WMT) : Free Stock Analysis Report
 
Oracle Corporation (ORCL) : Free Stock Analysis Report
 
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
 
Xerox Corporation (XRX) : Free Stock Analysis Report
 
The Kroger Co. (KR) : Free Stock Analysis Report
 
Franco-Nevada Corporation (FNV) : Free Stock Analysis Report
 
Barrick Gold Corporation (GOLD) : Free Stock Analysis Report
 
Tesco PLC (TSCDY) : Free Stock Analysis Report
 
Alamos Gold Inc. (AGI) : Free Stock Analysis Report
 
Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report
 
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