3 dirt cheap dividend stocks to buy under $5

What’s better than a quality company paying nice dividends?

A share price under $5 bucks for a quality company paying huge sustainable dividends, that’s what.

With dividend yields of 11.8%, 8.5% and 6.8% respectively, the following 3 shares could be a nice fit for the income portion of your portfolio. The bonus is that with share prices under $5.00, investors can also buy a reasonable amount of shares too, and these 3 companies also trade at cheap valuations. What more could an investor want?

Without further ado, here they are…

Countplus Limited (ASX: CUP) – price 68 cents

The financial services company offers financial planning, wealth advice, broking and accounting services to its customers, and also holds 5.4% of the shares in Class Limited (ASX: CL1) which now makes up ~24% of the value of the company. Countplus currently pays a fully franked dividend yield of 11.8% (4 quarterly payments of 2 cents each) at the current price and expects to match last year’s net profit and earnings per share in FY2016. That puts Countplus on a P/E ratio of around 7.3x.

Tamawood Limited (ASX: TWD) – price $2.93

We’ve mentioned home designer and builder Tamawood several times over the past few years as a quality share paying decent dividend yields (averaging 9.7% over the past decade) and this year is no exception. The company has committed to paying a 25 cent fully franked dividend this financial year (FY16) – which, at the current price of $2.93, is a whopping dividend yield of 8.5%, and a P/E ratio of around 11.7x. For a more in-depth discussion of the company’s operations, this article should help.

Contango Microcap Limited (ASX: CTN) – price 93 cents

With a share price of 93 cents, listed investment company Contango Microcap is trading at a big discount to the net tangible assets per share, which at the end of April stood at $1.14 before tax. That’s the equivalent of buying a dollar worth of assets for just 81 cents. The Contango portfolio also contains 71 small to medium cap securities, giving investors instant wide diversification at discounted prices. The cherry on top is the company’s trailing 6.8% partly-franked dividend yield with 3.7 cents expected to be paid as a final dividend in September/October 2016.

These 3 blue chip shares might be a bigger and a bit more expensive but could be the perfect solution for your portfolio

Discover The Motley Fool's top 3 blue chips for 2016. These 3 'new breed' shares pay fully franked dividends AND offer the very real prospect of significant capital appreciation. Simply click here to gain access to this comprehensive FREE investment report.

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Motley Fool writer/analyst Mike King owns shares in Contango Microcap. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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