Let the dividend be your guide.
Many investors are enamored with cheap stocks because they can hold a larger stake in the market. Others seek dividends, and owning more shares can mean a bigger quarterly payday. There are plenty of stocks that are cheap for good reason. That low stock price is often a sign of recent trouble. How can you weed out risky stocks from bargain companies that have stabilized and may even move higher? One way is the dividend, which is a hedge against declines as well as proof a company has cash to share with investors. Here are seven stocks with generous dividends priced less than $10 a share.
Nokia (ticker: NOK)
Some investors may not think much of this one-time mobile phone giant that failed to keep up with Apple (AAPL) and Samsung Electronics Co. However, Nokia has moved on to network services, and what’s left is nothing to sneeze at with a market capitalization north of $30 billion. After tough decisions in the last decade, there is little danger of NOK stock going belly up. The company has roughly $5 billion in cash on hand and stable cash flow — even if NOK is significantly smaller than in its heyday.
Current yield: 4.2 percent
Prospect Capital Corp. (PSEC)
Prospect Capital is a business development company, a category of stock that specializes in investment and financing enterprises — like a publicly traded version of a private equity group. PSEC specializes in middle-market companies, including later stage financing, turnarounds and bridge transactions for companies in need of an interim solution as they obtain longer-term loans. Right now the deals done by Prospect include investments in health care, real estate, financial and industrial firms. The result is a diversified income stream for PSEC, which is passed on to shareholders via generous dividends.
Current yield: 9.5 percent
Israel Chemicals Ltd. (ICL)
As the name implies, ICL is a chemicals company located in Israel. Its primary business is agricultural minerals, such as potash and phosphorus. Longtime income investors may remember the epic crash of these specialty chemicals companies as oversupply resulted in a glut around the time of the financial crisis and resulting global downturn. Recently, though, agricultural chemicals companies have been helped by a stabilizing global economy, plus better demand trends. Though a bit of a niche company, ICL has shown stable revenue — and is attracting a lot of interest in 2018 with roughly 40 percent gains since Jan. 1.
Current yield: 3 percent
United Microelectronics Corp. (UMC)
The semiconductor industry is fiercely competitive with razor-thin margins. Chipmakers have been incredibly dynamic in the last few years as a wave of consolidation has resulted in big-ticket buyouts. With an upswing in the global economy and all manner of home goods from televisions to refrigerators now using sophisticated chips, there has been continued investor interest in the sector. And, there is the anticipation of additional buyouts. As a mid-sized semiconductor company with a strong balance sheet, UMC is attractive to long-term investors — even if the pop from an acquisition doesn’t transpire.
Current yield: 4.2 percent
Spirit Realty Capital (SRC)
Real estate investment trust SRC is a Texas-based net-lease operator, which means it collects rent from tenants at some 1,500 properties but isn’t responsible for maintenance costs. It’s not easy to build a portfolio that large and at such terms, but when you have the capital and luxury of attractive locations then you can drive a hard bargain. Top 10 tenants include major names Walgreens Boots Alliance (WBA) and Home Depot (HD). These established operations mean a steady flow of revenue to the company and dividends to SRC shareholders.
Current yield: 6 percent
AU Optronics Corp. (AUO)
AU Optronics researches the technology behind liquid crystal screens and other flat panel displays. The strength in consumer spending over the last few years has benefited television sales and AUO shareholders. Shares have been a bit sluggish in 2018 thanks to uncertainty about global trade policies. However, income investors will be more than satisfied if AUO stock remains flat and continues to throw off an incredibly generous dividend as it has done for the last several years.
Current yield: 8.5 percent
National CineMedia (NCMI)
The death of the movie theater has been greatly exaggerated, as Hollywood continues to rake in plenty of money with blockbuster films. NCMI is positioned to take advantage of the enduring strength of cinema, thanks to its focus on pre-movie marketing and related advertising in theaters nationwide. It taps into the immediate strength of movie theaters but without the risk faced by studios that must come up with the next big idea or cinema operators that worry about keeping their seats filled. There may not be a lot of growth but there is reliability — and more generous dividends.
Current yield: 7.5 percent
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7 Cheap Dividend Stocks Under $10 originally appeared on usnews.com
