Some stocks offer 10%-plus yields at less than $10 per share.
It’s probably not a surprise to anyone that a host of stocks have declined in 2022 amid the market-wide volatility. But the good news for income-oriented investors is that there are plenty of cheap dividend stocks under $10 now, offering significant yields without big price tags. There is always risk when it comes to purchasing a stock that’s in decline, something known as “catching a falling knife” in Wall Street circles. However, long-term dividend investors can sometimes reap big rewards by looking for low-priced stocks that offer big yields after a rough patch — presuming their dividends survive intact, of course. The following seven cheap stocks all offer very generous dividend yields based on current pricing. All dividends are calculated on a trailing-12-month basis.
AGNC Investment Corp. (ticker: AGNC)
Though structured as a real estate investment trust, or REIT, AGNC doesn’t actually own any physical real estate. Instead, it makes its money through investments in mortgage securities backed up by government agencies such as the Federal National Mortgage Association, or Fannie Mae. As the financial crisis of 2008 showed, even government-backed mortgages can still come with risks. However, the mammoth yield makes this cheap stock worth a look all the same. Besides, AGNC has a great history of 12-cent dividends paid once per month dating all the way back to the pandemic-related disruption of early 2020. And based on current earnings projections, AGNC has more than enough cash to cover those payments both this year and next if the company’s forecasts hold as expected.
Dividend yield: 17.1%
Equitrans Midstream Corp. (ETRN)
An energy infrastructure stock with a market value under $4 billion, Equitrans is a natural gas pipeline and storage company mainly serving the Appalachian Basin. It also operates a water service business providing fresh water to parts of Ohio. These stable and recession-proof operations don’t see the same volatility that other businesses see, due to rising or falling prices. ETRN is basically just a middleman, moving essential goods like gas or water around in its pipes. That allows for a reliable operation that supports a generous and consistent dividend payment to shareholders.
Dividend yield: 7.3%
Hanesbrands Inc. (HBI)
Hanesbrands is the consumer apparel giant behind a host of products from socks and undergarments to athletic wear to licensed collegiate gear. Its nameplates include Champion, Playtex, Maindenform, L’eggs and, of course, Hanes. While broader fashion trends may change on a dime, the staples sold by HBI are always in favor with consumers thanks to their practicality. This allows for strong performance regardless of big-picture spending trends and helps support a generous dividend yield that is roughly five times the S&P 500’s average yield right now.
Dividend yield: 8.5%
Lumen Technologies Inc. (LUMN)
Though a cheap stock under $10, Lumen Technologies is the largest name on this list at nearly $7 billion in market value. The telecom firm is actually an S&P 500 component because of that scale, even though it’s admittedly much smaller than big-name firms like Verizon Communications Inc. (VZ) and AT&T Inc. (T). Formerly known as CenturyLink, Lumen has been reshaping itself over the last several years through acquisitions and divestitures — including the 2021 sale of its Latin American operations for almost $3 billion. The company offers one of the biggest yields on this list, but based on fiscal 2022 earnings it’s only paying out about two-thirds of total profits via dividends.
Dividend yield: 16.6%
New York Community Bancorp Inc. (NYCB)
A regional bank with about 240 branches and about $60 billion in total assets, NYCB operates in New York, New Jersey, Ohio, Florida and Arizona. The bank is involved with the regular grind of financial services including residential loans, savings accounts and other various financial products for consumers and businesses. The company was recently granted approval to acquire smaller competitor Flagstar Bancorp Inc. (FBC), which will grant it economies of scale. And considering the deal is taking place during a rough economic environment, NYCB is getting a good price for this deal instead of chasing a high-flying competitor during a booming bull market.
Dividend yield: 7.6%
Prospect Capital Corp. (PSEC)
Prospect Capital is a business development company that functions more like an investment firm than a typical financial stock. The roughly $3 billion company takes stakes in midsized corporations with less than $150 million in annual profits, and isn’t afraid of financing troubled companies that need to make a turnaround. PSEC currently has its cash behind staples manufacturers that make packaged foods or household products, along with health care, software and machinery companies. This diversified portfolio helps generate a reliable and generous dividend that is paid once per month.
Dividend yield: 9.7%
Rithm Capital Corp. (RITM)
Another mortgage-related REIT, Rithm provides financial services to the real estate and mortgage sectors in the United States. The company focuses on mortgage servicing and residential-housing-related securities. In a rising interest rate environment, things can be challenging for mortgage-related firms like this because lending slows down and the costs associated with its own borrowing go up. However, RITM hasn’t fared much worse than the rest of Wall Street in this challenging environment but pays an amazing double-digit dividend yield.
Dividend yield: 11.6%
7 best cheap dividend stocks under $10:
— AGNC Investment Corp. (AGNC)
— Equitrans Midstream Corp. (ETRN)
— Hanesbrands Inc. (HBI)
— Lumen Technologies Inc. (LUMN)
— New York Community Bancorp Inc. (NYCB)
— Prospect Capital Corp. (PSEC)
— Rithm Capital Corp. (RITM)
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7 Best Cheap Dividend Stocks Under $10 originally appeared on usnews.com
Update 11/08/22: This story was published at an earlier date and has been updated with new information.
