Stocks under $5 are, by definition, penny stocks. Anyone that tries to tell you different or convince you otherwise is lying to you. Or, they don’t know what they’re talking about. I’ve wrangled up a few special stocks under $5. And these pay dividends.

If you want to make some passive income from your investments, dividends are a great way to go. You do need to be careful with them, though. Because sometimes, a higher dividend is a red flag. But this is only if the company is using the high rate to lure investors. And if the company doesn’t need to bring in more investors, a high dividend is a great sign. It means they are using their profits and revenues to pay it back to the shareholders.

Stocks under $5 can be dangerous. They are volatile by nature. And that means you can make a lot of money fast from a small investment. But that also means you can lose your money fast. So, it pays off when you don’t blindly invest.

Best stocks under $5.

Best Stocks Under $5

  • National CineMedia Inc. (Nasdaq: NCMI)
  • LoanDepot, Inc. (NYSE: LDI)
  • Western Asset Mortgage Capital Corp. (NYSE: WMC)
  • Orchid Island Capital Inc. (NYSE: ORC)
  • Pangaea Logistics Solutions Ltd. (Nasdaq: PANL)
  • Network-1 Technologies Inc. (NYSE: NTIP)
  • ARC Document Solutions, Inc. (NYSE: ARC)

Penny Stocks Under $5

No. 7 National CineMedia Inc.

Dividend Yield: approx. 7%

This stock under $5 handles displaying the advertisements in theatres. So, those ads before you watch a movie? That’s National CineMedia. But, they also handle advertising for mobile tech and online. It’s the largest advertiser in this industry in the U.S. And operates in over 1,500 theaters.

Recently, the company has been using AI to enhance its user’s experience. And, it’s planning on participating in a conference soon. But not just any conference. It’s the J.P. Morgan Global High Yield & Leveraged Finance Conference. Besides this, the company was able to raise $50 million more in financing at the beginning of the year.

No. 6 LoanDepot, Inc.

Dividend Yield: approx. 8%

As people buy more items on credit, this stock under $5 is doing well. And there aren’t many signs of this trend slowing down. Companies are taking advantage of the “buy now, pay later” craze. And who can blame them? If they make more money that way, it only makes sense.

LoanDepot is not a bank. But, it provides mortgages and non-mortgage products. And it’s funded over $275 billion since it first opened for business. LoanDepot is the fifth largest retail mortgage lender. The company serves over 27K customers each month.

No. 5 Western Asset Mortgage Capital Corp.

Dividend Yield: 13.2%

Western Asset is a stock under $5 that helps investors put money into mortgage assets. It’s a REIT, but the payout comes from mortgage holders paying back the loan plus interest. It’s managed by high-performing fixed-income managers. And it has global investments and infrastructure. Even better, these mortgages aren’t privately held by homeowners. They invest in institutional mortgages. That means these are buildings owned by trustworthy organizations and individuals.

Recently, Western Asset secured a loan worth $399 million for a residential building. And the leadership has lots of experience building the company up. In addition, they each have many years of experience in their respective fields. Plus, past success shows they can bring this company higher.

No. 4 Orchid Island Capital Inc.

Dividend Yield: 21%

Despite its insane dividend yield, this stock under $5 is in a bear. That generally would be a warning sign. But, it states on its website that it’s a REIT. And it’s not subject to corporate federal income tax. Orchid can do this because it pays forward all taxable income to the shareholders. Meaning, all the profit made is paid out to investors who hold the stock.

And, they are being very smart about this. Since the company pays it all out, they technically don’t have any taxable income. They don’t pay taxes. And that’s a good thing for investors and the company! That’s what allows that huge 21% dividend yield.

No. 3 Pangaea Logistics Solutions Ltd.

Dividend Yield: 4%

This stock under $5 has been in a long-time bear. But, it’s now picking up into a bull, and we could see some longer-term growth. Pangaea is such a great name for this company. Because they connect all continents as if they were one. Pangaea is a dry-bulk shipping service, which owns a large fleet of ships. And items like soybeans, coal and other dry products are shipped long distances.

Interestingly, Pangaea treats each ship as its own business. And that means coming up with ideas and innovations for each customer. Plus, each vessel has its own manager that guides and directs it. As the supply chain catches up, businesses like Pangaea are doing quite well.

No. 2 Network-1 Technologies Inc.

Dividend Yield: approx. 4%

Network-1 is a stock under $5 that helps inventors protect their intellectual property. Plus, the company aids in coming up with solutions for monetization of those ideas. It helps them get the appropriate licenses and make money with them. Working with only one type of inventor would limit them. So, they work with individuals, and commercial businesses. Plus, academic entities.

In addition to helping others make money from their patents, Network-1 has many patents. And, of course, they make significant revenue from them. And recently, the company received a new one from the U.S. patent office. So, now they hold thirty patents.

Stocks Under $5 No. 1 ARC Document Solutions, Inc.

Dividend Yield: approx. 6%

After spending a couple years marching down, it’s now picking back up to a slow and steady bull. This stock under $5 handles documents for architecture. But not residential buildings. ARC provides solutions for other construction, and engineering. So, this could be a great stock to be holding this year. Especially with all the infrastructure money being pumped into the economy.

There are many industries that infrastructure money is affecting. And this is directly linked to a few of them. Plus, it’s differentiated. It has a unique niche that it serves, which is a positive sign. And, it’s large compared to other companies offering this type of service.