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) | 4.3% |
| Lloyds Banking Group PLC (LYG) | 4.9% |
| Nokia Corp. (NOK) | 3.4% |
| Societe Generale SA (OTC: SCGLY) | 4.2% |
| Sirius XM Holdings Inc. (SIRI) | 3.5% |
| Aegon Ltd. (AEG) | 5.4% |
| Patterson-UTI Energy Inc. (PTEN) | 3.4% |
*As of Aug. 20 close.
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 for Banco Santander investors, the stock has held up well. Analyst Johann Scholtz says Santander’s businesses in Brazil and Spain have been impressive lately, helping offset weakness in the U.K. Scholtz says Santander is benefiting from lower interest rates in Brazil, and investors shouldn’t be spooked by its exposure to emerging markets. Morningstar has a “buy” rating and $6.30 fair value estimate for SAN stock, which closed at $4.76 on Aug. 19.
Dividend yield: 4.3%
Lloyds Banking Group PLC (LYG)
Lloyds Banking Group is a diversified bank and insurance provider based in the U.K. Lloyds shares are up about 25% this year, the best performance of any stock on this list. Analyst Niklas Kammer says Lloyds has undergone a massive portfolio restructuring in the past decade that has made the bank a low-risk, nearly pure-play U.K. domestic and retail banking investment. It has also significantly reduced its reliance on wholesale funding. Kammer says Lloyds has maintained impressive net interest margins in a difficult mortgage market. Morningstar has a “buy” rating and $3.90 fair value estimate for LYG stock, which closed at $3.05 on Aug. 19.
Dividend yield: 4.9%
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 is struggling with weak sales growth, but trends have been improving. Total revenue was down 18% in the second quarter, but Nokia said easier comparisons and a recovery in customer ordering will help it return to growth in the second half of 2024. Dolgin says 5G network investment spending has hit different countries in waves in recent years, making Nokia’s results choppy. Morningstar has a “buy” rating and $6 fair value estimate for NOK stock, which closed at $4.16 on Aug. 19.
Dividend yield: 3.4%
Societe Generale SA (OTC: SCGLY)
Societe Generale is one of the largest commercial banks in France. Kammer says he has mixed feelings about Societe Generale’s plan to sell its U.K. and Swiss private banking subsidiaries to Swiss bank Union Bancaire Privee for nearly $1 billion. He says streamlining the bank’s focus is generally a good idea, but the private banking business is a profitable, capital-light business with a sticky client base. Kammer is more supportive of the bank’s divestment of its 70% stake in Societe Generale Madagasikara in Madagascar. Morningstar has a “buy” rating and $6.40 fair value estimate for SCGLY stock, which closed at $4.69 on Aug. 19.
Dividend yield: 4.2%
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 40% this year, the worst performance of any stock on this list. However, Dolgin says Sirius XM is implementing several promising long-term strategies that could stop the bleeding. In the second quarter, revenue was down 3% and the company lost 173,000 net subscribers. Dolgin says Sirius XM’s stock is undervalued, but investors may need to be patient given its difficult near-term outlook. Morningstar has a “buy” rating and $5 fair value estimate for SIRI stock, which closed at $3.04 on Aug. 19.
Dividend yield: 3.5%
Aegon Ltd. (AEG)
Aegon is a Dutch insurance company that offers insurance, savings, pension, and investment products and services around the world. Analyst Henry Heathfield says Aegon should benefit from a change in leadership and ongoing efforts to divest noncore assets and streamline its business. The company has said it aims to focus on capital-light businesses that require minimum capital investments from its own balance sheet. Heathfield says Aegon’s business is finally moving in the right direction. Morningstar has a “buy” rating and $6.80 fair value estimate for AEG stock, which closed at $6.43 on Aug. 19.
Dividend yield: 5.4%
Patterson-UTI Energy Inc. (PTEN)
Patterson-UTI Energy is a U.S. oil and gas drilling company that provides U.S. land drilling services. Analyst Katherine Olexa says Patterson’s second quarter results were unimpressive. Weak natural gas prices and consolidation in the energy market have weighed on rig demand. However, Olexa says the futures market is pricing in a rebound in natural gas prices and rig demand may soon improve. She says new liquefied natural gas terminals will come online in 2025 and past customers currently focused on integrating acquisitions will soon return. Morningstar has a “buy” rating and $14 fair value estimate for PTEN stock, which closed at $9.44 Aug. 19.
Dividend yield: 3.4%
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7 Best Cheap Dividend Stocks to Buy Under $10 originally appeared on usnews.com
Update 08/20/24: This story was previously published at an earlier date and has been updated with new information.
