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.
[Sign up for stock news with our Invested newsletter.]
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 | Upside Potential* | Dividend Yield |
| Banco Santander SA (ticker: SAN) | 28.8% | 4.4% |
| Lloyds Banking Group PLC (LYG) | 36.8% | 5.1% |
| Vale SA (VALE) | 56.5% | 16.5% |
| Nokia Corp. (NOK) | 33.0% | 3.1% |
| Telefonica SA (TEF) | 24.1% | 7.9% |
| Vodafone Group PLC (VOD) | 43.8% | 8.5% |
| Aegon Ltd. (AEG) | 6.7% | 5.5% |
*Based on Jan. 17 closing price and Morningstar fair value estimates.
Banco Santander SA (SAN)
Banco Santander is a large Spanish bank with a sizable international presence. Since early 2023, several 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 Banco Santander’s earnings growth momentum will likely slow in 2025, but the company recently guided for double-digit earnings-per-share growth and return on tangible equity of 16%. Scholtz says Santander is a banking leader in Brazil, Mexico and Chile. Morningstar has a “buy” rating and $6.30 fair value estimate for SAN stock, which closed at $4.89 on Jan. 17.
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 gained about 36% in the past year, the best performance of any stock on this list. Analyst Niklas Kammer says U.K. banks have largely avoided the loan losses that have spooked banking investors around the world since interest rates began rising rapidly roughly three years ago. Kammer says Lloyds is one of the strongest pure-play U.K. banking investments, reporting robust net interest margins even in a difficult mortgage market. Morningstar has a “buy” rating and $3.90 fair value estimate for LYG stock, which closed at $2.85 on Jan. 17.
Dividend yield: 5.1%
Vale SA (VALE)
Vale is a Brazilian miner and is one of the world’s largest iron ore and nickel producers. Vale shares lagged in 2024 and are down about 35% in the past year. The silver lining is the pullback has pushed Vale’s dividend yield up to 16.5%, the highest on this list and a rarity among stocks priced under $10. Analyst Jon Mills says China’s aggressive economic stimulus measures have supported iron ore demand and prices heading into 2025, suggesting Vale’s stock is meaningfully undervalued. Morningstar has a “buy” rating and $14 fair value estimate for VALE stock, which closed at $8.94 on Jan. 17.
Dividend yield: 16.5%
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 has reported significantly improved business trends that suggest the company is on track to return to sales growth in 2025. In the most recent quarter, improving margins and new deal signings were particular bright spots for Nokia. Dolgin says the market doesn’t seem to be fully pricing in the improvement he sees ahead as Nokia benefits from the global 5G upgrade cycle. Morningstar has a “buy” rating and $6 fair value estimate for NOK stock, which closed at $4.51 on Jan. 17.
Dividend yield: 3.1%
Telefonica SA (TEF)
Telefonica is the leading telecommunications company in Spain. Analyst Javier Correonero says the depreciation of Latin American currencies has weighed on Telefonica’s growth numbers, especially in Brazil. However, Correonero says Telefonica has successfully defended its market share in Spain, and its joint venture deal with Vodafone to share fiber infrastructure is a win-win for both companies. In Brazil, Correonero says Telefonica is generating solid broadband and mobile customer growth. He is bullish on Telefonica’s strategy of divesting non-core infrastructure assets and reducing debt. Morningstar has a “buy” rating and $5 fair value estimate for TEF stock, which closed at $4.03 on Jan. 17.
Dividend yield: 7.9%
Vodafone Group PLC (VOD)
Vodafone is a leading telecom company in Germany and the U.K. Vodafone was recently granted conditional regulatory approval to merge with private competitor Three UK if the combined company commits to updating the U.K. mobile network over the next eight years. Correonero says this merger will reduce the number of U.K. network operators from four to three, potentially stabilizing the pricing environment. Correonero says the Three merger and Vodafone’s divestment of its Spanish and Italian operations are steps in the right direction. Morningstar has a “buy” rating and $12.20 fair value estimate for VOD stock, which closed at $8.48 on Jan. 17.
Dividend yield: 8.5%
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 has historically struggled with biting off more than it can chew in its diversification efforts. By expanding to new geographies and products too quickly, Heathfield says Aegon created more challenges than it could properly manage. However, Aegon’s current leadership regime has shifted gears, instead focusing on divesting non-core assets and streamlining operations. Heathfield says Aegon is finally headed in the right direction. Morningstar has a “buy” rating and $6.80 fair value estimate for AEG stock, which closed at $6.37 on Jan. 17.
Dividend yield: 5.5%
More from U.S. News
8 Best Stocks to Buy Now With $1,000
10 of the Best Stocks to Buy for 2025
10 Best Growth Stocks to Buy for 2025
7 Best Cheap Dividend Stocks to Buy Under $10 originally appeared on usnews.com
Update 01/21/25: This story was previously published at an earlier date and has been updated with new information.
