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 becomes. 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.
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Investors buying cheap dividend stocks should always take a close look at their business fundamentals. That said, there are occasional bargains to be found for income investors. Here are seven of the best dividend stocks under $10, according to Morningstar analysts:
| Stock | Dividend yield | Implied upside over Oct. 23 close |
| Banco Santander SA (ticker: SAN) | 4.5% | 27.0% |
| Mizuho Financial Inc. (MFG) | 3.4% | 13.5% |
| Lloyds Banking Group PLC (LYG) | 4.7% | 23.4% |
| Nokia Corp. (NOK) | 3.0% | 28.2% |
| Societe Generale Societe anonyme (OTC: SCGLY) | 3.7% | 23.1% |
| Nissan Motor Co. Ltd. (OTC: NSANY) | 4.8% | 151.4% |
| SCOR SE (OTC: SCRYY) | 9.0% | 59.1% |
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 Spain and Brazil have been particularly strong as of late, helping offset weakness in the UK. Scholtz says Santander’s Latin American business generates impressive returns on equity in the high teens or higher. Morningstar has a “buy” rating and $6.30 fair value estimate for SAN stock, which closed at $4.96 on Oct. 23.
Dividend yield: 4.5%
Mizuho Financial Inc. (MFG)
Mizuho Financial is one of Japan’s largest financial services companies. Analyst Michael Makdad says Mizuho shares took a hit when the Bank of Japan raised interest rates for only the second time in 17 years, but he says interest rate normalization in Japan will eventually help Japanese banks expand their net interest margins. Makdad says Mizuho’s wholesale securities business has been a standout, and the bank has improved its earnings quality. Mizuho’s Greenhill buyout should also boost its merger and acquisition advisory opportunities. Morningstar has a “buy” rating and $4.61 fair value estimate for MFG stock, which closed at $4.06 on Oct. 23.
Dividend yield: 3.4%
Lloyds Banking Group PLC (LYG)
Lloyds Banking Group is a diversified bank and insurance provider based in the UK. Analyst Niklas Kammer says U.K. mortgage demand has improved, and he expects additional growth in coming quarters. Kammer says Lloyds has a very strong retail franchise in the U.K. and is an excellent low-risk way for investors to add exposure to retail and commercial banking. He says Lloyds has overcome periods of mortgage pricing weakness and maintained robust net interest margins, a testament to its focus on profitability over volumes. Morningstar has a “buy” rating and $3.90 fair value estimate for LYG stock, which closed at $3.16 on Oct. 23.
Dividend yield: 4.7%
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Nokia Corp. (NOK)
Nokia is a global telecom equipment and digital map data vendor that also licenses intellectual property to third parties. Including dividends, Nokia’s shares are up 41.9% year to date through Oct. 23, the best performance of any stock on this list. Analyst Matthew Dolgin says Nokia’s latest earnings numbers are a clear indication that its business has recovered from cyclical lows, but further improvement may come slowly. He says Nokia’s margins are expanding, and its new deal signings are encouraging. Dolgin says Nokia should benefit from an ongoing global 5G upgrade cycle
. Morningstar has a “buy” rating and $6 fair value estimate for NOK stock, which closed at $4.68 on Oct. 23.
Dividend yield: 3%
Societe Generale Societe anonyme (OTC: SCGLY)
Societe Generale is one of the largest commercial banks in France. Kammer says he has mixed feelings about Societe Generale’s deal to sell its U.K. and Swiss private banking subsidiaries to Union Bancaire Privee for nearly $1 billion. He believes it would do Societe Generale good to have a more geographically focused business, but he says private banking is a profitable, capital-light business that has sticky clients and decent profitability. Regardless, Kammer is bullish on Societe Generale’s deal to sell its Madagascar business given subscale retail banking in such small markets is challenging. Morningstar has a “buy” rating and $6.40 fair value estimate for SCGLY stock, which closed at $5.20 on Oct. 23.
Dividend yield: 3.7%
Nissan Motor Co. Ltd. (OTC: NSANY)
Tokyo-based Nissan is one of the world’s largest automakers. Including dividends, the stock is down 32.4% year to date, the worst performance of any stock on this list. Analyst Vincent Sun says the weakness is a buying opportunity for patient investors willing to wait out Nissan’s long-term turnaround. New model launches and popular model refreshes could help the company’s performance in coming quarters. Sun says Nissan has navigated a difficult environment well in recent years, and it will emerge from its turnaround plan as a leaner, more efficient company. Morningstar has a “buy” rating and $13.30 price target for NSANY stock, which closed at $5.29 on Oct. 23.
Dividend yield: 4.8%
SCOR SE (OTC: SCRYY)
SCOR is an independent, global Tier 1 reinsurance company headquartered in France. The stock pays a 9% dividend, the highest on this list. Analyst Henry Heathfield says SCOR’s recent deal to acquire Altarea’s 15.9% stake in the share capital of MRM highlights SCOR’s strategy of building a real estate portfolio. Heathfield says SCOR’s reinsurance contracts tend to be longer term, and its real estate assets have relatively stable values. Stability is good news for SCOR given its high leverage and inconsistent track record with acquisitions. Morningstar has a “buy” rating and $3.50 fair value estimate for SCRYY stock, which closed at $2.20 on Oct. 23.
Dividend yield: 9%
[SEE: 7 Best Dividend Growth Stocks to Buy Today]
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7 Best Cheap Dividend Stocks to Buy Under $10 originally appeared on usnews.com
Update 10/24/24: This story was previously published at an earlier date and has been updated with new information.
