These are the best cheap dividend stocks to buy for less than $10.
When investors are looking for “cheap” stocks, many tend to gravitate toward unprofitable penny stocks because of the growth potential they offer. While it’s true that some very low-priced companies eventually hit their stride and start raking in big profits, many more never dig out from their deep losses. If you want to avoid getting roped in to cheap stocks that never achieve a stable balance sheet, then consider these seven cheap dividend stocks that have the reliable profits to support dividends that are more than the typical S&P 500 company. All of these stocks trade for less than $10 but offer yields of 1.3% or more at current prices.
Alliance Resource Partners LP (ticker: ARLP)
Though billing itself as a “natural resource company,” ARLP is a pretty unglamorous coal miner that primarily offers thermal coal to utilities and for export. The good news is that Alliance has about 1.65 billion tons of proven and probable coal reserves in Illinois, Indiana, Kentucky, Maryland, Pennsylvania and West Virginia. The bad news is, obviously, that climate change is making it harder and harder to justify the use of coal for electricity generation. Shares of this miner are cheap for a reason, but the yield is decent, and it’s worth wondering if the concerns are overblown given that the world won’t unplug from coal tomorrow. It may not be a long-term holding, but ARLP could be a decent play in the near term — particularly with 80% gains year to date to prove momentum is on its side.
Current yield: 2.43%
Energy Transfer LP (ET)
Energy Transfer is a “midstream” energy company that operates more than 90,000 miles of energy infrastructure across the U.S. and three natural gas storage facilities in Texas. In addition to selling natural gas to wholesalers and commercial users, ET also directly supplies electric utilities for power plant operations. This business is about as steady as you can get, with strong built-in demand that helps support its generous and regular dividend payments. Rising demand thanks to a recovering economy has increased volumes for ET lately, and the stock has managed to gain an impressive 44% in the last 12 months as a result. That’s on top of a dividend that’s nearly five times the typical stock in the S&P 500.
Current dividend: 6.39%
Entravision Communications Corp. (EVC)
The smallest and perhaps the most aggressive stock on this list, Santa Monica, California-based Entravision operates television, radio and digital media networks mainly targeting Spanish-speaking audiences. It also offers a suite of digital advertising solutions to directly connect advertisers with local selling efforts across the EVC network of 55 television stations and 49 Spanish-language radio stations. The company is young and hungry, moving out of the red and into profitability in 2021 with projections that its revenue will roughly double from 2020 levels. Its 2.5 cent quarterly dividend is good for a yield that’s slightly better than the S&P 500 but could continue to grow nicely in the years ahead if success continues for this low-priced media stock.
Current dividend: 1.37%
Gerdau S.A. (GGB)
Brazil-based steelmaker Gerdau has benefited from both rising commodity prices in 2021 as well as rising global demand. GGB makes the building blocks of many industries, from the steel rods used in construction to rolled sheets used in manufacturing appliances to specialty parts for automobiles. On top of an above-average yield, GGB has surged more than 80% in the last 12 months thanks to both better margins as well as strong sales internationally. As a foreign company, the dividends aren’t as regular as U.S. stocks, but the annualized yield based on previous payouts is still quite generous.
Current dividend: 2.48%
Mitsubishi UFJ Financial Group Inc. (MUFG)
Yet another international stock on the list, MUFG is a major Japanese bank with a market capitalization of $70 billion. It’s an integrated financial powerhouse, offering traditional retail and business banking services along with investment banking, global commercial services and pension fund management. Founded in 1880 and headquartered in Tokyo, Mitsubishi UFJ is the Japanese version of a megabank like Wells Fargo & Co. (WFC) with a rock-solid dividend and the scale to weather any economic environment. It just so happens the Japanese environment has been rosy in 2021, and this stock has ridden these tailwinds to roughly 28% gains year to date.
Current dividend: 4.14%
MFA Financial Inc. (MFA)
MFA operates as a real estate investment trust, or REIT. This special class of stock gets preferential tax treatment as long as it delivers 90% of its taxable income back to shareholders — which means a mandate for big dividends. Oddly enough, MFA doesn’t actually own any physical real estate as it invests in residential mortgage assets, mainly including so-called “agency” mortgage debt backed by the U.S. government through Fannie Mae and Freddie Mac. The roaring domestic housing market has been very good for MFA stock as a result, and shares have risen about 22% year to date to outperform the broader stock market in addition to paying a regular and generous payday via its dividend.
Current dividend: 6.42%
Yamana Gold Inc. (AUY)
Mining stock Yamana Gold is, as you may have guessed, in the precious metals industry. The $4 billion company has gold and silver production sites throughout the Americas, including its home country of Canada as well as Brazil, Chile and Argentina. As of its last annual filing, AUY boasted 394 million metric tons of proven gold mineral reserves. With gold prices trading around $1,750 an ounce lately, that’s a huge store of value Yamana is sitting on. As its minerals are sold off, AUY passes on a piece of the profits to shareholders via dividends — and despite the high value for an ounce of gold, one share of AUY is still quite affordable at current prices.
Current dividend: 2.8%
Seven of the best cheap dividend stocks to buy now:
— Alliance Resource Partners LP (ARLP)
— Energy Transfer LP (ET)
— Entravision Communications Corp. (EVC)
— Gerdau S.A. (GGB)
— Mitsubishi UFJ Financial Group Inc. (MUFG)
— MFA Financial Inc. (MFA)
— Yamana Gold Inc. (AUY)
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Update 08/12/21: This story was published at an earlier date and has been updated with new information.