A quarterly dividend payment from a high-quality stock may be as close to a sure thing as an investor can find on Wall Street. Even during periods of broad market weakness, the lower a stock’s price falls, the higher its dividend yield rises.
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Unfortunately, companies often cut their dividend payments as the first line of defense when times get tough, and many dividend stocks priced under $10 may not be safe investments. Investors buying cheap dividend stocks should always take a close look at their business fundamentals.
Here are seven of the best dividend stocks under $10, according to Morningstar:
| Stock | Forward dividend yield* |
| Banco Santander SA (ticker: SAN) | 4.4% |
| Lloyds Banking Group PLC (LYG) | 5.1% |
| Telefonica SA (TEF) | 7.5% |
| Banco Bradesco SA (BBD) | 6.4% |
| Vodafone Group PLC (VOD) | 11.1% |
| Nokia Corp. (NOK) | 3.9% |
| Sirius XM Holdings Inc. (SIRI) | 4.1% |
*As of June 17.
Banco Santander SA (SAN)
Banco Santander is a large Spanish bank with a sizable international presence. Since early 2023, many global bank stocks have been rattled by liquidity concerns and fears over bond portfolio losses. Fortunately, Banco Santander shares have been on a tear. Analyst Johann Scholtz says Santander has benefited from higher interest rates and has improved its operating leverage and efficiency. He says the bank’s 15% return on tangible equity in the most recent quarter makes it one of the most profitable banks he covers. Morningstar has a “buy” rating and $6.30 fair value estimate for SAN stock, which closed at $4.64 on June 14.
Dividend yield: 4.4%
Lloyds Banking Group PLC (LYG)
Lloyds Banking Group is a diversified bank and insurance provider based in the U.K. Lloyds shares are up 17.5% this year through June 14, including dividends — the best performance of any stock on this list. Analyst Niklas Kammer says Lloyds operates the strongest banking franchise in the U.K. After a major restructuring in the 2010s, Kammer says Lloyds now operates a low-risk retail and commercial bank that investors won’t lose sleep over. He says Lloyds has reported impressive net interest margins, even in a difficult mortgage pricing environment. Morningstar has a “buy” rating and $3.90 fair value estimate for LYG stock, which closed at $2.71 on June 14.
Dividend yield: 5.1%
Telefonica SA (TEF)
Telefonica is the leading telecommunications company in Spain. Analyst Javier Correonero says Telefonica’s Spanish business has been solid, but results in Brazil and Germany have been very impressive. He says the company is focused on cutting costs in Germany, and its Vivo brand is gaining market share in both mobile and fixed-line markets in Brazil. The Brazil business grew revenue by 10.4% last quarter. Saudi Arabia’s STC owns a 10% stake in Telefonica, and the Spanish government has a 7% stake and a Telefonica board seat. Morningstar has a “buy” rating and $5.50 price target for TEF stock, which closed at $4.35 on June 14.
Dividend yield: 7.5%
[SEE: 7 Dividend Stocks to Buy and Hold Forever]
Banco Bradesco SA (BBD)
Banco Bradesco is one of Brazil’s largest banks. Analyst Michael Miller says Bradesco will likely have a difficult year in 2024 as it deals with falling interest rates and tighter credit standards, both of which are pressuring net interest margins. However, Miller says the bank’s more conservative credit positioning has allowed it to reduce its provisioning for future loan losses and offset its net interest income declines. The drop in Bradesco’s over-90-day delinquency ratio from 5.9% to 5% in the past year is also encouraging. Morningstar has a “buy” rating and $3.50 fair value estimate for BBD stock, which closed at $2.39 on June 14.
Dividend yield: 6.4%
Vodafone Group PLC (VOD)
Vodafone is a leading telecom company in Germany and the U.K. Vodafone shares pay an 11.1% dividend, the highest yield of any stock on this list. Correonero says weakness in Germany has plagued Vodafone, particularly following changes to German TV laws that have prevented the company from contracting TV subscriptions in bulk through housing associations. He says Vodafone shares are undervalued at current levels, but investors may need to be patient for the stock to turn around given a lack of catalysts in the near future. Morningstar has a “buy” rating and $15 fair value estimate for VOD stock, which closed at $8.74 on June 14.
Dividend yield: 11.1%
Nokia Corp. (NOK)
Nokia is a global telecom equipment and digital map data vendor that also licenses intellectual property to third parties. Analyst Matthew Dolgin says Nokia’s sales took another big hit in the most recent quarter, but the company also reported wider margins and improved efficiency. Most importantly, Dolgin says both mobile network sales and network infrastructure sales will improve by the second half of 2024. While Nokia has lost market share in recent years, Dolgin says global 5G infrastructure investment will serve as a major tailwind. Morningstar has a “buy” rating and $5.90 fair value estimate for NOK stock, which closed at $3.62 on June 14.
Dividend yield: 3.9%
Sirius XM Holdings Inc. (SIRI)
Sirius XM Holdings is a leading provider of satellite and internet radio services, largely to the auto industry. The stock is down about 52% this year, the worst performance of any stock on this list. Dolgin says Sirius XM’s revenue remains stagnant, and the company is losing subscribers. Fortunately, the company is investing heavily in technology and content to improve its app and integration into vehicles. Management is optimistic these investments will lead to a rebound in subscriber numbers in the second half of the year. Morningstar has a “buy” rating and $5 fair value estimate for SIRI stock, which closed at $2.61 on June 14.
Dividend yield: 4.1%
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7 Best Cheap Dividend Stocks to Buy Under $10 originally appeared on usnews.com
Update 06/17/24: This story was previously published at an earlier date and has been updated with new information.
