Freddie Sears joined the Sky Blues in a similar deal from West Ham United last week and Stead will fight for a start alongside him, Clinton Morrison and Freddy Eastwood.
Speaking to the club's official website, Stead said: "It feels very good to have signed for Coventry City because it's a new challenge for me. I'm looking forward to getting some games, doing well and helping in any way I can for the final push of the season.
"It's a huge confidence boost for me that a club looking to go places looks to me to help them on their way.
"Everything at this club has the make-up to go places and I'm glad that I'm seen as part of that even if it's for the short term."