Taiss/AB 2 phase Incremental Rotary Encoder 360P/R DC 5-24v Wide Voltage Power Supply 6mm Shaft 360P/R

If you are having problems using this at 5V, it's because there is a generic LM7805 as a regulator for the internal power supply. The regulator will be in drop out unless you give it around 7V. This should be rated for 7V-24V. They are not suitable for 5V operation. The outputs are also open collector so you will need pullups to your desired logic level to get signals out of these. Attached are some pictures of the nice internal construction and the quadrature output signal.

arduino 5v DC works for me, just need two pull up resistor of 10k in my case.

As others have said, this needs more than 5V for stability and has open collector outputs. If you rewire power to the output of the regulator instead of the input, and move the outputs to these handy through holes on one side, you'll get 0 to about 2.6 volts on the outputs, which works nicely with my microcontroller without pullups.

The encoder worked perfectly with an arduino leonardo. I fed it 5v from the arduino and the output signal was nice and clean. This encoder is NPN, so make sure you declare the pins as INPUT_PULLUP in arduino or else they'll just read LOW all the time. It came with 3 M3 screws, the same ones shown in the picture. The item description didn't mention this so I thought I'd include it here. Great product.

Perfect