Cheap dividend stocks can offer big income.
With the stock market seemingly stuck in a rut over the past month and inflation threatening to eat at returns, many investors are looking to go “risk off” with dividend stocks. That’s because a company that can support a regular payout to shareholders naturally has a much more stable balance sheet than a company that is so concerned with covering its normal operating expenses that it can’t share the profits with investors. Unfortunately for many small investors, big dividend stocks like Johnson & Johnson (ticker: JNJ) can often cost more than $100 for a single share. If you’re looking for something a bit more affordable but still with a significant payout, look to these 10 cheap dividend stocks to buy under $10 per share.
America First Multifamily Investors LP (ATAX)
ATAX is a mortgage servicing company that primarily invests in mortgage revenue bonds issued to finance multifamily and student housing apartments. These debts are backed up by the potential rent from tenants after the facilities are completed, providing a continuous flow of cash down the road. Right now, the America First portfolio consists of roughly 12,000 rental units in 15 states, and it’s growing every year. Shares are up more than 50% year to date on a total-return basis, which includes dividends, thanks to strong performance but also to a bump in distributions from 9 cents to 11 cents quarterly in June.
Dividend yield: 7.2%
ASE Technology Holding Co. Ltd. (ASX)
Taiwan-based semiconductor stock ASE Technology isn’t your typical chipmaker, as it’s primarily involved in services like packaging and testing third-party circuits instead of worrying about its own designs or fabrication facilities. It’s decidedly smaller as a result, valued at about $16 billion, but this specialized tech company has deep relationships with other chipmakers in the region. And with supply chain disruptions creating a bottleneck globally for chips, ASX services have been in high demand as manufacturers look to partner with this company and scale up operations. Shares have jumped more than 70% in the last year, but more importantly for income investors is the fact that the company’s dividend has more than doubled from 2020 payouts, to 30 cents per share annually. Despite its rally, ASX is still among the cheap stocks, trading for about $7.20 per share.
Dividend yield: 4.2%
Berry Corp. (BRY)
Oil and gas producer Berry is small when compared with megacap energy giants on Wall Street, as it clocks in at only about $600 million in market cap and has roughly 3,700 operational wells, mainly in the American West. But one of the good things about being small is that BRY is also quite nimble — and as energy prices have risen markedly in the last year or so, it’s seen its stock rise from a low of about $3 in November 2020 to more than $7 at present. Income investors will be even more interested in the fact that Berry reinstated its 4-cent quarterly dividend in 2021 and recently boosted that by 50%. That will add a nice, consistent payday on top of the recent outperformance.
Dividend yield: 3.2%
EnLink Midstream LLC (ENLC)
EnLink is a midstream energy company that offers transportation and storage, primarily in north Texas, Oklahoma and Louisiana. Its core business is compressing, storing and transporting natural gas and natural gas liquids through a network of 11,900 miles of pipelines and almost 30 processing facilities and “fractionators” that separate the raw fossil fuels into usable parts. As economic activity has picked up and as natural gas has been in high demand as an alternative to dirtier energy sources like coal, ENLC has done a brisk business in 2021 and shares have doubled. And while ENLC’s dividend hasn’t recovered to pre-pandemic levels, its 9.4-cent quarterly payday per share is still good for a yield more than four times the typical S&P 500 component.
Dividend yield: 5.4%
Mitsubishi UFJ Financial Group Inc. (MUFG)
The international financial company MUFG is a major Japanese bank with a market capitalization of $75 billion, on par with other global names like Switzerland’s UBS Group Inc. (UBS) and roughly triple the size of leading U.S. regional banks. Founded in 1880 and headquartered in Tokyo, MUFG is a rock-solid company with the scale to weather any economic environment. And in 2021, the Japanese economy has been doing quite well now that the region has turned a corner from COVID-19, and this stock has ridden these tailwinds to roughly 35% gains year to date.
Dividend yield: 3.8%
Oaktree Specialty Lending Corp. (OCSL)
Credit services firm Oaktree is a Los Angeles-based enterprise that offers middle-market companies loans — primarily in the form of senior loans or equity co-investment to give them some real authority over the operations of the companies they invest in. Its portfolio is valued at $2.3 billion invested in 135 companies, with the most common structure being floating-rate investments tied to broader interest rate markets. As rates have risen lately, that has been particularly good for OCSL. As a result, Oaktree’s last four distributions are a case study in dividend growth, increasing every period, from 11 cents to 14.5 cents per share. That dividend growth coupled with strong operational performance has resulted in a year-to-date gain of about 36% for this cheap dividend stock, once you factor in payouts.
Dividend yield: 8.2%
PennantPark Investment Corp. (PNNT)
PennantPark is another business development company, or BDC, specializing in middle-market companies valued at $10 million to $50 million that need more cash to finance growth. It invests in a wide array of companies, from hotel operators to tech firms to energy companies to manufacturers. The portfolio is quite diversified, and as a result, PennantPark has been able to really cash in on the tailwind of resurgent economic growth around the U.S. in the last year. And as PNNT investments pay off, those profits are passed through via a 12-cent quarterly dividend that provides some extra cash on top of share values, which are up more than 40% in 2021.
Dividend yield: 7.4%
Prospect Capital Corp. (PSEC)
Next up among the best cheap dividend stocks to buy under $10 is Prospect Capital, also a BDC. Being a BDC means it operates as a kind of publicly traded private equity firm that invests in other businesses and then passes on a share of the profits to shareholders. And lately, the PSEC portfolio has shown a lot of potential, with gains of nearly 50% in 2021. Dividend investors will also like the fact that PSEC investments are diversified across a range of sectors and primarily focus on loans that generate reliable premium payments to support regular 6-cent monthly dividends. Over a full year, those 12 paydays really add up to an impressive yield.
Dividend yield: 9.1%
SFL Corp. Ltd. (SFL)
A $1 billion marine shipper based out of Bermuda, SFL operates roughly 80 vessels including tankers that serve the global oil and gas industry and dry bulk container ships that transport goods for manufacturers and other enterprises worldwide. Thanks to global supply disruptions and a general inflationary environment driving up prices in all corners of the economy, shippers have been able to command better rates this year — and SFL is no exception. The 15-cent quarterly payouts from SFL are good for a generous yield, further showing that even nominally cheap income stocks can boast great yields.
Dividend yield: 7.1%
SunCoke Energy Inc. (SXC)
Highlighted back in March as one of the best small-cap dividend stocks to consider in 2021, SXC has delivered big time in the intervening months as shares have appreciated by 50% in 2021. While SunCoke is indeed a coal stock, it’s focused primarily on “coking” coal, which is used to make iron ore into steel — rather than being a coal miner dependent on power plants continuing to use this admittedly dirty fossil fuel. Because of strong industrial and construction demand for steel thanks to a recovering global economy, SXC has been doing quite well lately. That’s on top of its reliable 6-cent-per-share quarterly dividend that survived the pandemic-related disruptions of 2020 intact.
Dividend yield: 3.7%
10 best cheap dividend stocks to buy under $10:
— America First Multifamily Investors LP (ATAX)
— ASE Technology Holding Co. Ltd. (ASX)
— Berry Corp. (BRY)
— EnLink Midstream LLC (ENLC)
— Mitsubishi UFJ Financial Group Inc. (MUFG)
— Oaktree Specialty Lending Corp. (OCSL)
— PennantPark Investment Corp. (PNNT)
— Prospect Capital Corp. (PSEC)
— SFL Corp. Ltd. (SFL)
— SunCoke Energy Inc. (SXC)
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Update 10/07/21: This story was published at an earlier date and has been updated with new information.