Is Silvercorp Metals Inc. (SVM) the best dividend stock under $5?

We recently published a list of The 10 best dividend stocks under $5In this article, we will look at how Silvercorp Metals Inc. (NYSE:SVM) compares to the other dividend stocks under $5.

Dividends have been a strong source of returns throughout time. These stocks have both theoretical and practical importance in evaluating equity values. Although dividend stocks have lagged the overall market in recent years, their long-term performance remains stable.

Since the beginning of 2024, the Dividend Aristocrats Index – which tracks companies that have consistently increased their dividends for at least 25 consecutive years – has provided investors with returns of over 8%. However, this performance has fallen short of expectations compared to the overall market, which has risen nearly 19% over the same period. Despite this shortfall, 2024 was a favorable dividend year overall. This improvement is largely due to several large technology companies, previously known for not paying dividends, announcing the launch of their dividend programs. In addition, these companies collectively paid out billions in their first dividend payments.

Also read: 12 best dividend stocks for steady growth

The long-term performance of dividend stocks also takes into account periods of high interest rates, when other asset classes typically suffer losses. This does not mean that dividend stocks only perform well during periods of high interest rates. While there is no clear link between their performance and interest rates, historical data shows that they remain relatively stable regardless of the interest rate environment. For example, during certain periods of rising interest rates in the U.S., such as the mid-1970s, dividend-paying stocks outperformed the overall market. Conversely, the performance of high-yield stocks remained relatively stable relative to the market when interest rates fell from the mid-1980s to the mid-1990s. Even if we ignore historical data and focus on more recent performance, we find that increased interest rates have not had a serious impact on the performance of dividend stocks. For example, when the Federal Reserve raised its benchmark interest rate seven times in 2022 to combat persistent inflation—four times in a row by 75 basis points each—dividend stocks outperformed the overall market. This could be because dividend-paying companies tend to be well-established, more stable, and have enough confidence in their cash flows to commit to paying back shareholders. In addition, the obligation to pay dividends forces financial discipline. Instead of using excess cash for acquisitions that may create value, buying back shares at uncertain prices, or funding speculative growth initiatives, executives are forced to manage distributions responsibly.

The story continues

With investors’ interest in dividend stocks growing, more and more companies are starting to pay and increase dividends. A key driver of this trend is that many companies, especially large technology companies, have significant cash reserves and are rapidly increasing their free cash flows. This strong financial base allows them to reward investors with higher dividends. According to the latest report from S&P Dow Jones Indices, companies included in the index paid $153.4 billion in dividends in the second quarter of 2024, up from $151.6 billion in the previous quarter and $143.2 billion in the same period last year. The report also highlighted that 539 dividend increases were reported, compared to 460 in the same period last year, representing a year-on-year growth of 17.2%. The total amount of these increases was $20.4 billion in the quarter, up significantly from $9.8 billion in the second quarter of 2023. With that in mind, we’ll take a look at some of the best dividend stocks under $5.

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Silvercorp Metals Inc. (NYSE:SVM)

Number of hedge fund owners: 13

Share price at the end of August 23: USD 3.86

Silvercorp Metals Inc. (NYSE:SVM) is a Canadian precious metals company primarily engaged in the exploration and development of silver-bearing deposits. The stock has gained over 53% since the beginning of 2024 due to rising silver prices. The company is constantly attracting investors’ attention as metals such as gold and silver are widely viewed as hedges against inflation. In addition, escalating tensions in the Middle East are pushing investors towards “safer” options such as precious metals.

Silvercorp Metals Inc. (NYSE:SVM) operates low-cost mines that generate consistent cash flow. The company’s strong balance sheet supports growth opportunities and ensures that shareholders are provided with sustainable value. Another reason for the company’s strong balance sheet is that silver has a promising future as global decarbonization and electrification are expected to lead to continued demand growth while forecasts predict limited supply growth. During the first quarter of fiscal 2025, the company produced approximately 1,146 ounces of gold and 1.7 million ounces of silver, which equates to approximately 1.8 million ounces when including other metals. The company also sold 1.7 million ounces of silver during the quarter.

Silvercorp Metals Inc. (NYSE:SVM) generated over $40 million in operating cash flow in the first quarter of 2025. The company ended the quarter with over $215 million in cash and cash equivalents. It currently pays a semi-annual dividend of $0.0125 per share and has a dividend yield of 0.64% as of August 23. Over its dividend history, the company has returned over $200 million to shareholders through dividends and share buybacks, making SVM one of the best dividend stocks under $5.

At the end of June 2024, 13 hedge funds owned shares of Silvercorp Metals Inc. (NYSE:SVM), unchanged from the previous quarter, according to Insider Monkey’s database. These shares have a total value of over $31 million.

Total SVM 6th place on our list of the best dividend stocks under $5. While we recognize SVM’s potential as an investment, we believe some AI stocks promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that’s more promising than SVM but worth less than five times its earnings, read our report on the cheapest AI stock.

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Disclosure: None. This article was originally published on Insider Monkey.