In this article we will take a look at the 10 best dividend stocks to buy under $10. You can skip our detailed analysis of these dividend stocks’ outlook for 2021 and the merits of dividend investing and go directly to the 5 Best Dividend Stocks to Buy Under $10.
Dividend investing is still one of the best ways to consistently benefit from the stock market. Many investors use dividends as a hedge against losses when stock prices plummet. A Raymond James report that tracked stocks data from the 1930s to the 2010s concluded that dividend stocks have better returns than non-dividend stocks, especially during turbulent times. Compounded dividend stocks accounted for about 50% of the returns in the period, according to the report. The report tracked roughly 1,000 stocks and observed that high-yield dividend stocks had better returns and a lower risk profile than low-yield stocks. An S&P Global report released in 2011 revealed that dividend revenue contributed roughly 6.12% of the average American’s personal income. In comparison, it contributed 4.16% ten years prior and 3.58% in the previous 6 years. The data thus shows that dividend revenue is increasingly becoming a part of personal income in American households.
Combining Consistent Dividend Hikes with Strong Growth Potential?
That's why income investors have been paying a lot of attention to major dividend stocks that also have a huge growth potential. These names include IBM Common Stock (NYSE: IBM), Apple Inc. (NASDAQ: AAPL), JPMorgan Chase & Co. (NYSE: JPM) and Microsoft Corporation (NASDAQ: MSFT).
JPMorgan Chase (NYSE:JPM) has a strong growth potential amid a rebound in economic activity. For the first quarter, JPMorgan Chase (NYSE:JPM) beat its Q1 earnings estimates on the back of strong global investment banking fees and equity market revenue. Consumer spending was up 14% year over year, while consumer debt remained flat as people take benefit from stimulus cheques and quantitative easing.
Apple Inc. (NASDAQ: AAPL) is one of the best stocks to buy for both income investors and those looking for long-term growth. The company has major plans for the future that will boost its stock price. Famous Apple (NASDAQ:AAPL) analyst Ming-Chi Kuo recently revealed that he expects the company to launch a foldable iPhone in 2023 20 million units in the first year. Apart from these growth plans, Apple Inc. (NASDAQ: AAPL) is also a great dividend stock. It has a dividend yield of 0.68%, with 8 years of consecutive dividend hikes. Earlier this year, the company said that it plans to announce more annual dividend increases in the near future.
IBM (NYSE:IBM) is another excellent stock that should be in your portfolio if you are looking for a solid dividend play with future growth potential. Last month, IBM (NYSE:IBM) declared a quarterly dividend of $1.64 per share, a 0.6% increase from prior dividend of $1.63. On April 20, BMO maintained a Market Perform rating on IBM (NYSE:IBM) stock but increased its price target from $138 to $150.
The firm noted IBM’s beat in the Cloud and GBS businesses.
Microsoft Corporation (NASDAQ: MSFT), which is up 35% over the last 12 months, is also one of the best dividend stocks to buy now. This stock also has a strong growth potential along with steady dividend hikes. In September 2020, the company announced a whopping 10% increase to its quarterly dividend. Microsoft Corporation (NASDAQ: MSFT) has hiked its dividend consistently for the last 16 years. Last month, Microsoft announced quarterly results, posting better-than-expected numbers. Azure, MSFT’s Cloud division, saw a growth of 50%, better than the consensus estimate of 46%.
Cheap Dividend Stocks
But what do IBM Common Stock (NYSE: IBM), Apple Inc. (NASDAQ: AAPL), JPMorgan Chase & Co. (NYSE: JPM) and Microsoft Corporation (NASDAQ: MSFT) have in common? They are expensive, and out of reach for those who are looking for best dividend stocks to buy under $10.
Finding valuable stocks is becoming difficult by the day amid financial volatility that isn't sparing even the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Let's start our list of best dividend stocks to buy under $10.
Best Dividend Stocks to Buy Under $10
10. Companhia Paranaense de Energia (NYSE: ELP)
Dividend Yield: 5.29% No. of Hedge Fund Holders: 9
Companhia Paranaense de Energia (NYSE:ELP) is an electric utility company based in Brazil. It is the largest company in Paraná state in Brazil, with ownership controlled by the state. Its capacity and industry segment makes it an attractive dividend investment that is supported by attractive figures.
Companhia Paranaense de Energia (NYSE:ELP) reported a revenue of R$5 billion in Q1, representing a 22.9% YoY gain. Its GAAP EPS for the same period was R$2.75.
The stock ranks 10th in our list of best dividend stocks to buy under $10.
9. Prospect Capital Corporation (NASDAQ: PSEC)
Dividend Yield: 8.78% No. of Hedge Fund Holders: 8
Prospect Capital Corporation (NASDAQ: PSEC) is a business development company that invests in equity and debt in middle-market companies and businesses in the U.S. It aims to deliver consistent value to shareholders by spreading out its investments across various industries.
In the December quarter, Prospect Capital Corporation (NASDAQ: PSEC)'s net investment income was $0.21 per share, which outperformed the $0.15 per share consensus estimate. Quarterly revenue was $172 million, which was up 6.41% year over year. Revenue beat the consensus by $26.66 million.
Prospect Capital Corporation (NASDAQ: PSEC) ranks 9th in our list of best dividend stocks to buy under $10.
The company announced on February 21 the pricing of its 3.706% notes due in 2026, whose principal amount is $25 million. It plans to use the proceeds from the notes issuance to refinance some of its current debt and maintain balance sheet liquidity.
8. Sachem Capital Corp. (NYSEAMERICAN: SACH)
Dividend Yield: 9.30% No. of Hedge Fund Holders: 1
Sachem Capital Corp. (NYSEAMERICAN: SACH) is a U.S-based real estate finance institution that makes, manages, and services a first mortgage loan portfolio. The company registered an impressive Q4 2020 with a $5.7 million revenue figure after a 98% gain compared to Q4 2019. Its net income for the same period was $2.3 million, which represents a 150% YoY gain. Such gains highlight the company’s growth potential. It ranks 8th in our list of best dividend stocks to buy under $10.
Sachem Capital Corp. (NYSEAMERICAN: SACH) recently concluded the sale of 7.75% unsubordinated and unsecured notes due in 2025. The notes were worth $$25 million, but the company netted $24.75 million after fees and commissions. Sachem Capital Corp. (NYSEAMERICAN: SACH) plans to use $23.95 million of the proceeds to cover general corporate activities such as expanding its mortgage loan portfolio or buying other real estate ventures.
7. Capstead Mortgage Corporation (NYSE: CMO)
Dividend Yield: 9.19% No. of Hedge Fund Holders: 14
Capstead Mortgage Corporation (NYSE: CMO) operates as a self-managed REIT, and it earns a significant proportion of its income from investing in a portfolio of leveraged ARM securities. It ensures the security of its investments by investing in securities backed by Fannie Mae or Freddie Mac which are government-sponsored institutions. This combination not only secures its investments but also makes it an attractive dividend stock to investors. Capstead Mortgage Corporation (NYSE: CMO) ranks 7th in our list of best dividend stocks to buy under $10.
Capstead Mortgage Corporation (NYSE: CMO) recently announced its Q1 2021 financials, revealing that it generated a GAAP net income of $18.9 million or $0.15 per share. The figure was slightly lower than the $23.3 million, or $0.19 per share, earned in Q4 2020.
6. Portman Ridge Finance Corporation (NASDAQ: PTMN)
Dividend Yield: 10.34% No. of Hedge Fund Holders: 9
Portman Ridge Finance Corporation (NASDAQ: PTMN) is a company that deals with business management. It recently concluded an $80 million private offer for 4.875% senior unsecured notes due 2026. The net proceeds from the private placement amounted to $77.7 million after fee deductions. Portman Ridge will use some of the proceeds from the sale to redeem the 6.125% Senior Unsecured Notes that will expire in September 2022. The rest of the funds will be used for general corporate purposes and to expand its portfolio as part of its investment strategy. It is one of the best dividend stocks to buy under $10.
Unlike IBM Common Stock (NYSE: IBM), Apple Inc. (NASDAQ: AAPL), JPMorgan Chase & Co. (NYSE: JPM) and Microsoft Corporation (NASDAQ: MSFT), PTMN is an affordable dividend stock. As of May 10, the stock is trading at $2.40.
Portman Ridge Finance Corporation (NASDAQ: PTMN) generated a net investment income of $5.2 million, or $0.08 per share, in Q4 2020, better than the $2.7 million, or $0.06 per share, it reported in the previous quarter.
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Disclosure: None. 10 Best Dividend Stocks to Buy Under $10 is originally published on Insider Monkey.
