A combination of stock price gains and compounding effects from reinvested dividends can be a powerful one-two punch for long-term investors. In fact, about 40% of the S&P 500’s total returns over the past 90 years have come from reinvested dividends. Regular dividend payments from high-quality companies can provide investors with an effective hedge against inflation, and they can also serve as a source of passive income during economic downturns.
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Fortunately, dividend stocks don’t need to cost an arm and a leg. Here are 10 of the best cheap dividend stocks to buy under $20, according to Morningstar analysts:
| Stock | Dividend Yield | Implied Upside* |
| NatWest Group PLC (ticker: NWG) | 5.4% | 17.8% |
| Ford Motor Co. (F) | 3.4% | 3.2% |
| Infosys Ltd. (INFY) | 4.1% | 11.4% |
| Kenvue Inc. (KVUE) | 4.8% | 33.1% |
| Blue Owl Capital Inc. (OWL) | 8.9% | 16.7% |
| Aegon Ltd. (AEG) | 5.6% | 11.7% |
| Tencent Music Entertainment Group (TME) | 2.6% | 171.1% |
| Vipshop Holdings Ltd. (VIPS) | 4.3% | 63.8% |
| VF Corp. (VFC) | 2.1% | 129.9% |
| Americold Realty Trust Inc. (COLD) | 5.8% | 11.5% |
*From May 29 close.
NatWest Group PLC (NWG)
NatWest is a U.K. retail and commercial bank and financial services provider. The company’s leading consumer banking brands are NatWest, the Royal Bank of Scotland and Ulster Bank. Analyst Niklas Kammer says NatWest faces downside risks heading into 2027 if macroeconomic uncertainties persist and begin to force larger loan loss write-offs that would weigh on profitability and capital generation in the near-to-medium term. However, Kammer says NatWest is a strong commercial and retail banking franchise and offers the best risk-reward skew among U.K. banks. Morningstar has a “buy” rating and $18.90 fair value estimate for NWG stock, which closed at $16.04 on May 29.
Ford Motor Co. (F)
Ford is one of the world’s largest vehicle manufacturers, producing automobiles under its Ford and Lincoln brands. Its leading vehicle models include its F-Series full-sized trucks, its Explorer SUVs and its Transit commercial vans. Analyst David Whiston says Ford has finally managed to restructure and refocus its business, and today’s Ford is effectively managing warranty and materials costs and selling exciting vehicles. Whiston says Ford’s recent cost management success suggests additional earnings upside ahead, and Ford has plenty of liquidity to weather an unforeseen dip in sales. Morningstar has a “buy” rating and $18 fair value estimate for F stock, which closed at $17.44 on May 29.
Infosys Ltd. (INFY)
Infosys is an Indian company that provides a number of information technology consulting services around the world, including business consulting, engineering, technology and outsourcing services. The company’s top offerings include its Cobalt cloud services ecosystem, its Topaz generative and agentic artificial intelligence platform, and its Finacle digital banking software solutions. Analyst Luke Yang says Infosys efficiently adapts to new technology trends. Yang is confident its comprehensive portfolio of AI products can help the company maintain mid-single-digit annual revenue growth over the next five years. Morningstar has a “buy” rating and $14.10 fair value estimate for INFY stock, which closed at $12.65 on May 29.
Kenvue Inc. (KVUE)
Kenvue is the largest pure-play consumer health stock and is the owner of popular brands such as Band-Aid, Tylenol, Neutrogena, Aveeno, Johnson’s, Listerine and Zyrtec. Kenvue was spun off from parent company Johnson & Johnson (JNJ) and went public in May 2023. Analyst Keonhee Kim says Kenvue’s struggling skin health and beauty business has rebounded in 2026, but macroeconomic headwinds will pressure sales volumes in the near term. Kim says premiumization of consumer health care products, an aging consumer population and growth in emerging markets should be long-term tailwinds. Morningstar has a “buy” rating and $23 fair value estimate for KVUE stock, which closed at $17.28 on May 29.
Blue Owl Capital Inc. (OWL)
Blue Owl Capital is an alternative asset management firm that provides attractive financing and capital solutions to investment management firms and their portfolio companies. The company manages several business development companies, including Blue Owl Capital Corp., Blue Owl Technology Income Corp. and Blue Owl Capital Corp. II. OWL shares have an 8.9% dividend yield, the highest of any stock on this list. Analyst Greggory Warren says Blue Owl has eased concerns about private credit market liquidity by continuing to attract new investor cash. Morningstar has a “buy” rating and $12 fair value estimate for OWL stock, which closed at $10.28 on May 29.
Aegon Ltd. (AEG)
Aegon is a Dutch insurance company that offers insurance, savings, pension, and investment products and services around the world. In December 2025, Aegon announced plans to move its headquarters to the U.S. and change its name to Transamerica, a transition that it aims to complete by the end of 2027. Analyst Henry Heathfield says Aegon’s divestment of its Netherlands business is part of the company’s strategy to maintain a capital-light business that places minimal stress on its balance sheet and will allow mid-single-digit dividend growth. Morningstar has a “buy” rating and $9.40 fair value estimate for AEG stock, which closed at $8.41 on May 29.
Tencent Music Entertainment Group (TME)
Tencent Music Entertainment is the largest online music streaming platform in China. It operates several of the country’s leading music apps, including QQ Music, Kuwo Music and Kugou Music. Analyst Ivan Su says the recent regulatory approval for Tencent Music to acquire podcast provider Ximalaya is good news because it will create cost synergies and cross-selling opportunities. While Soda Music is pressuring Tencent Music’s growth, Su says the Music streaming industry in China is still in its early growth stages, and Tencent remains the clear leader. Morningstar has a “buy” rating and $25 fair value estimate for TME stock, which closed at $9.22 on May 29.
Vipshop Holdings Ltd. (VIPS)
Vipshop is a Chinese company that operates the e-commerce website Vip.com. The company provides special offers and deep discounts on apparel, fashion and other branded products and is the leading online off-price retailer in China. Analyst Chelsey Tam says Vipshop is undervalued because the market does not fully appreciate China’s consumer spending recovery potential or Vipshop’s loyal VIP customer base and merchandising capabilities. Tam says Vipshop’s Super VIP paid membership program has significantly improved customer loyalty by providing benefits such as free shipping and returns. Morningstar has a “buy” rating and $23.30 fair value estimate for VIPS stock, which closed at $14.22 on May 29.
VF Corp. (VFC)
VF Corp. is a leading global lifestyle apparel and footwear company that sells products via wholesale partnerships and direct-to-consumer retail stores and e-commerce platforms. Its recognizable brands include The North Face, Vans and Timberland. Analyst David Swartz says VF’s Reinvent plan has been a success and the company is on track to hit its key 2028 targets of at least 55% gross margins, a 10% operating margin run rate and a leverage ratio of 2.5 or less. Its outdoor segment has performed particularly well. Morningstar has a “buy” rating and $39.50 fair value estimate for VFC stock, which closed at $17.18 on May 29.
Americold Realty Trust Inc. (COLD)
Americold Realty Trust is a real estate investment trust that is a leading owner and operator of temperature-controlled cold storage warehouses. These facilities primarily hold perishable food products, but they also hold additional temperature-sensitive items, such as flowers, pharmaceuticals and chemicals. Analyst Kevin Brown says Americold’s undervalued stock indicates the market is not fully pricing in its balance sheet improvements and the degree to which modest margin improvements and incremental revenue gains over the next several years will contribute to long-term funds from operations growth. Morningstar has a “buy” rating and $17.50 fair value estimate for COLD stock, which closed at $15.69 on May 29.
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10 Best Cheap Dividend Stocks to Buy Under $20 originally appeared on usnews.com
Update 06/01/26: This story was previously published at an earlier date and has been updated with new information.
