Diversify with income-producing stocks at bargain prices.
Investors looking for a safe harbor amid rising inflation, Federal Reserve rate hikes, potential stagflation and an ongoing war often look to stocks that pay out a reliable dividend. In times of volatility and potential recession, securing a steady income can bring peace of mind. Investors also try to diversify in times of risk. But those with smaller accounts may struggle to diversify their portfolio with dividend stocks, as the dividend aristocrats can be northward of $400 in price. These seven dividend-paying stocks are all under $10 and run the gamut from gold to semiconductors to beverage and packaging companies, so investors can choose according to their preferred strategy while also earning consistent yields.
Yamana Gold Inc. (ticker: AUY)
Investors looking to hedge the volatile effects of inflation often look to several safe harbors. Two of those would be gold, which traditionally has been used as an inflation hedge, and dividend stocks, which can at least be relied on for a payday even when the stock’s price goes down. Canadian precious metal producer Yamana Gold checks both boxes here. The company has benefited from inflation and has largely outperformed the price of gold throughout the year, with shares rising 17% year to date. In late May, South African gold miner Gold Fields Ltd. (GFI) announced it would buy Yamana in a $6.7 billion all-stock acquisition that would create the fourth-largest gold producer in the world. Each AUY share — which closed at $4.92 on June 24 — would be worth 0.6 GFI stock — which closed at $9.54 on June 24 — implying a 17% upside for AUY stock at current price levels. Gold Fields said both companies’ boards unanimously approved the deal and recommended shareholders cast their vote in favor at a meeting to be held before the end of September. Another upside would be GFI’s current dividend yield of 3.3%.
Dividend yield (trailing 12 months): 2.4%
Ardagh Metal Packaging SA (AMBP)
If you’re looking to invest for the longer term, it’s hard to pick a longer-term company than Ardagh Metal Packaging. The $3.6 billion, Luxembourg-based maker of sustainable metal and glass packaging touts its products as “infinitely recyclable,” which benefits from the longer-term trend as the world shifts away from plastic packaging for their drinks and toward companies with environmental, social and governance goals. Ardagh is the second-largest supplier of metal beverage cans by value in Europe and the third largest in the Americas, and it operates 24 production facilities with more on the way. AMBP declared $400 million in dividend payments in February, but shifted gears in June to use $200 million on stock buybacks through the end of 2023 and $240 million on 10-cent quarterly dividends going forward, which brings its dividend yield down from a sky-high 13% to a still healthy and respectable 6.3%, when calculated by its most recent dividend, or MRD.
Dividend yield (MRD): 6.3%
United Microelectronics Corp. (UMC)
United Microelectronics Corp. was founded as Taiwan’s first semiconductor company, but it doesn’t get the attention its larger cousin, Taiwan Semiconductor Manufacturing Co. (TSM), gets. Taiwan’s second-largest foundry has a price-earnings ratio of 8.4 and a forward P/E of 7.7, making it undervalued compared with TSM’s current P/E of 19.8 and forward P/E of 13.4. UMC has beaten earnings estimates handily for the past two years, has trailing-12-month earnings-per-share growth just shy of 100% and is forecast to post second-quarter EPS growth on July 27. UMC counts Samsung Electronics Co. Ltd. (SSNLF) and Qualcomm Inc. (QCOM) among its customers but is focused on making chips for the automotive and “Internet of Things” industries. Considering that a major drag on the electric vehicle growth cycle has been the semiconductor shortage, UMC has tail winds behind it. In May, UMC announced it would be partnering with Toyota-backed auto-parts manufacturer Denso to build a semiconductor production plant in Japan and is investing $5 billion to expand its Singaporean manufacturing facility.
Dividend yield (TTM): 7.0%
Annaly Capital Management Inc. (NLY)
Annaly Capital Management is a tried-and-true pick for dividend investors. The company specializes in mortgage-backed securities, mainly from Fannie Mae or Freddie Mac, and boasts a profit margin of more than 80%. That’s good news, because as a real estate investment trust, or REIT, it is required to distribute at least 90% of its taxable income to shareholders in the form of dividends, and in exchange, it pays no federal income tax. Annaly is undervalued at the moment, with a P/E ratio of 3.5 and a forward P/E of 6.7. NLY has beaten earnings estimates for the past eight quarters and analysts are bullish on its prospects, despite the rise in interest rates. And with an annual payout of 88 cents for a stock priced around $6, a retirement portfolio with $1 million invested in NLY would earn an annual income of around $146,000.
Dividend yield (TTM): 13.9%
Gilat Satellite Networks Ltd. (GILT)
Gilat Satellite Networks is an Israeli telecom provider that develops and sells VSAT, or very-small-aperture terminal, satellite ground stations providing broadband services in Israel and internationally. Commercial use of satellites has grown in recent quarters with the high-profile use of SpaceX’s Starlink satellites in the Ukraine conflict. The global commercial satellite imaging market is expected to bring in $5.8 billion in 2022 and more than double in the next decade, according to Future Market Insights. GILT managed 19% revenue growth in the first quarter of 2022 and is guiding for between 14% and 23% revenue growth for the year. Though it’s a smaller company, it has put out a dividend each year for the past three years, most recently a 63-cent dividend in 2021.
Dividend yield (MRD): 10.2%
Ambev SA (ABEV)
Ambev is a Brazilian brewing and distribution company, and subsidiary of multinational booze conglomerate Anheuser-Busch InBev SA (BUD), making it a producer and distributor of beers like Brahma, Corona and Presidente, as well as Budweiser, Beck’s and Stella Artois. ABEV has consistently met or beat EPS estimates and is expected to have a good 2022, particularly with the World Cup coming up in November and December. Ambev has focused on reducing inflation costs, primarily from aluminum and barley, through hedging and focusing on returnable packaging. Ambev partners with the aforementioned recyclable packing company Ardagh Metal Packaging and also announced a $154 million investment to build a new sustainable glass facility in Brazil in April.
Dividend yield (TTM): 4.8%
Pangaea Logistics Solutions Ltd. (PANL)
While supply chain issues continue to snarl up ports, terminals and multiple industries, shipping companies have banked record profits. Pangaea Logistics is in the business of seaborne dry bulk logistics, including loading, discharge, chartering, planning and vessel management. PANL is up more than 30% year to date and is still reasonably priced, with a P/E ratio of 2.8. Pangaea saw its stock climb to $7 on June 6, but it dropped back down close to $5 on June 23, when it was upgraded to a “buy” by Refinitiv. PANL has also more than doubled its quarterly dividend this year, which would give it a 5.8% yield if calculated by its most recent dividend.
Dividend yield (TTM): 3.8%
7 best cheap dividend stocks under $10:
— Yamana Gold Inc. (AUY)
— Ardagh Metal Packaging SA (AMBP)
— United Microelectronics Corp. (UMC)
— Annaly Capital Management Inc. (NLY)
— Gilat Satellite Networks Ltd. (GILT)
— Ambev SA (ABEV)
— Pangaea Logistics Solutions Ltd. (PANL)
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Update 06/27/22: This story was published at an earlier date and has been updated with new information.