Contrary to popular belief, not all dividend stocks are priced at double- and triple-digit levels. Some of them are downright cheap stocks, with prices below $10 per share, allowing income-seeking investors to own a round lot of them for not a lot of money.
Better still, while theoretically it shouldn’t matter, in reality, cheap stocks don’t face the eventual psychological hurdle of being valued at eye-popping prices that even cause veteran investors to balk.
Share splits do happen for a reason, after all.
With that in mind, here’s a closer look at nine attractive but cheap dividend stocks — each priced at less than $10 per share — that also offer nice to downright outstanding yields.
Cheap Dividend Stocks: Monmouth Real Estate Investment (MNR)
Price Per Share (As of 8/13): $9.73
MNR Dividend Yield: 6.2%
Conventional wisdom says we should steer clear of real estate investment trusts like Monmouth Real Estate Investment (MNR) when interest rates are rising or are about to rise. Indeed, this might be why MNR lost more than 20% of its value between January and June, when the Federal Reserve began to make it clear that higher rates were looming.
It’s not a particularly well-supported theory, however.
The fact is, there’s a great deal of history that says the same economic growth that spurs the need for rate hikes also spurs increasing rent payments … particularly in the office and industrial rental arenas, where Monmouth Real Estate puts the bulk of its focus.
With that as the backdrop, fans of dividend stocks might want to scoop up some MNR while it’s still trading under $10 per share, and while it’s paying a dividend yield of more than 6%. Given the caliber of its properties and the stunning consistency of its payout, the market is likely to pull Monmouth Real Estate back out of the cheap stocks bin soon enough.
Cheap Dividend Stocks: Frontier Communications (FTR)
Price Per Share (As of 8/13): $5.36
FTR Dividend Yield: 7.8%
Frontier Communications (FTR) has had a rough 2015. After peaking at $8.46 right before its February earnings announcement, the stock spent the next five months moving to what would eventually become a 50% haircut.
The prod? An earnings miss on top of concerning news that the company would be taking on up to $7.9 billion worth of debt to finance the purchase of landline assets owned by Verizon (VZ). The sellers might have overshot their downside target, however, putting FTR within the ranks of the market’s cheapest of the cheap dividend stocks, and pushing the yield up to its current reading of 7.8%.
Better yet, just a few days ago, JPMorgan upgraded Frontier Communications from “neutral” to “overweight” in the wake of better-than-expected second quarter results.
Cheap Dividend Stocks: Just Energy Group (JE)
Price Per Share (As of 8/13): $6.89
JE Dividend Yield: 7.6%
Canadian company Just Energy Group (JE) is classified as a utility stocks, and that’s essentially what it is.
That’s not all the company is, however. It’s also an energy middleman, of sorts, calling itself an energy management solutions provider. JE also sells smart thermostats and residential solar products, rounding out a rather diversified package.
More important to value seekers, Just Energy Group is one of only a handful of very cheap stocks right now that also offers a healthy dividend. It’s currently paying well more than 7%.
Cheap Dividend Stocks: Mobile TeleSystems (MBT)
Price Per Share (As of 8/13): $7.89
MBT Dividend Yield: 9%
With the meltdown of Chinese stocks garnering a great deal of investor attention of late, it’s been largely overlooked that Russian stocks have also been getting hard.
Big mistake, as their pullback turned some of these equities into downright bargains.
Case in point: Mobil’nye Telesystemy PAO (MBT), or more simply, Mobile TeleSystems. In the shadow of a 42% pullback since mid-May and barely a discernible rebound effort in the meantime, at roughly $8 per share and a yield of 9%, MBT is still one of the international market’s best-looking cheap stocks.
And yes, though not with a huge degree of consistency, Mobile TeleSystems pays a solid dividend on a relatively regular basis.
Cheap Dividend Stocks: Prospect Capital Corporation (PSEC)
Price Per Share (As of 8/13): $7.38
PSEC Dividend Yield: 13.6%
The last several months haven’t been easy for owners Prospect Capital Corporation (PSEC). Just when it looked like the stock might pull out of a funk in May, it fell apart again and moved to lower depths, reaching new 52-week lows just a week ago.
That pullback may have done fans of dividend stocks a huge favor, though. That dip pulled PSEC shares down to their current prices above $7, making it one of the most underestimated names any investor could find for less than $10 per share.
The net result of that tumble is a dividend yield of almost 14% that’s not nearly as threatened as some make it out to be. In fact, if interest rates truly are on the rise for the long haul, that’s going to work measurably in favor of Prospect’s profitability.
Cheap Dividend Stocks: Navios Maritime Partners L.P. (NMM)
Price Per Share (As of 8/13): $9.74
NMM Distribution Yield: 17%
Most maritime shippers have been struggling of late, dealing with a glut of oil tankers built during the surge of oil demand in 2008, and more recently with drybulk fleet owners fending off the impact of waning commodity demand.
Navios Maritime Partners L.P. (NMM), however, seems to have escaped those rough seas, continuing to turn a profit, and continuing to share a nice piece of those profits with shareholders.
Last quarter was no exception. The company earned 34 cents per share, and though it opted to dish out a slightly higher dividend payout of 41.25 cents per share (translating into a trailing yield of 17%), it should be noted Navios Maritime Partners generally earns more than it passes along. The recent lull in commodity prices and demand has created a similar lull in earnings.
For people who like cheap stocks — and wouldn’t mind a little income to boot — NMM is apt to rebound when commodities do again, resulting in a much higher price than its current $9.79.
Cheap Dividend Stocks: Harte Hanks (HHS)
Price Per Share (As of 8/13): $4.83
HHS Dividend Yield: 7%
With a market cap of only $300 million and a stock priced at less than $5 per share, marketing consultant Harte Hanks (HHS) doesn’t turn a lot of heads.
It should, though.
The past four years have been tough ones for the company. Per-share earnings have fallen from 2010’s peak of 84 cents to what should be a profit of only 20 cents per share this year. That should be the end of the weakness, however, with the earnings picture finally starting to measurably improve in 2016.
And to underscore the acknowledgment that the overdue shake-up is for real, the prior CEO stepped down last month, an interim has been named, and a search for a permanent replacement has begun.
Normally such disruption would be cause for pause, and admittedly, HHS is a risky bet at this tenuous time. But with a dividend yield of 7%, Harte Hanks at least deserves a spot in a list of speculative cheap stocks to consider.
Cheap Dividend Stocks: Windstream Holdings (WIN)
Price Per Share (As of 8/13): $6.39
WIN Dividend Yield: 9.4%
After spinning off part of itself as a REIT back in April, investors weren’t quite sure what to make of the remainder of telecom company Windstream Holdings (WIN). Unwilling to take any chances, though, the consensus was to sell it first and ask questions later. WIN slumped from a post-spinoff price near $11 to a low of $4.42 last month.
Well, as it turns out, things aren’t that bad. In fact, they’re much better than expected. Although it still booked a loss last quarter, Windstream’s loss of 48 cents per share still was better than analysts’ estimates for a loss of 61 cents.
The quarterly report from WIN followed news that the company declared a 15-cent dividend, payable to shareholders of record at the end of September, and implying a dividend yield of around 10%.
All told, the signs suggest the company is in a much better financial position than feared. It’s still on the list of undervalued cheap stocks — and cheap dividend stocks in particular — but with the 31% gain since last month’s low still going strong, this one could offer significant capital appreciation as well as income in the very near future.
Cheap Dividend Stocks: BGC Partners (BGCP)
Price Per Share (As of 8/13): $9.49
WIN Dividend Yield: 5.9%
With a dividend yield of 5.9%, BGC Partners (BGCP) isn’t exactly a show-stopper on this list. But, at a price of only $9.64 per share and good odds of dividend growth in the foreseeable future, BGCP ranks among the market’s best cheap stocks with income growth in the cards.
BGC Partners is an international boutique brokerage firm. Although revenue had stagnated over the past couple of years, the heat was turned up again in the first quarter of this year. Analysts are looking for top-line growth of 46% this year and another 7% next year, with income projected to rise from last year’s 62 cents per share to 78 cents this year to 91 cents per share in 2016.
At that growth rate, BGC Partners should have little problem dishing out considerably more income in the near future.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
