Key Takeaways:
- Dividend investing is one of the most popular investment strategies. Monthly dividend stocks make budgeting easier for those living on passive income. Furthermore, frequent reinvestment of monthly payments increases the overall return of the portfolio.
- People with limited capital can use affordable stocks priced under $10 as a source of regular income. As well as having a low entry threshold, cheap monthly dividend stocks under $10 often have high dividend yields.
- The main drawback of monthly dividend stocks under 10 is their unreliable payout. There are no dividend aristocrats among them. They are mostly middle-market companies with a short dividend history.
In this article, the top 10 monthly dividend stocks under $10 will be presented and the risks to be considered when investing in such assets will be discussed.
Table of Contents
Understanding Monthly Dividend Stocks Under $10
Four profit distributions per year are included in the dividend calendar of most American corporations. Small-cap and mid-cap companies usually pay monthly dividends. These companies most often operate in industries such as energy, finance, and real estate. Of the stocks traded on American exchanges and over-the-counter markets, only 76 have such a payment frequency.
Among the top 10 monthly dividend stocks under $5 and $10, you will find Real Estate Investment Trusts (REITs) and Business Development Companies (BDCs). Their tax regime differs from that of most companies, as most payments do not qualify as ‘qualified dividends’. Therefore, income investors need to consider not only cash flow planning, but also tax planning.
This type of income investments is suitable for a high-yield strategy involving significant risk.
Benefits of Monthly Dividend Stocks Under $10
Provided the portfolio is well diversified, frequent payments ensure cash flow stability for the investor. Compounding advantages of monthly dividend stocks under 10 include:
- dividend reinvestment at more frequent intervals provides the greatest possible benefits of dollar-cost averaging;
- even with less than $1,000 in capital, low stock prices make portfolio diversification possible;
- when market conditions change, such assets have the potential for high growth because of their volatility.
Risks and Considerations
Even the best monthly dividend stocks under $10 carry significant risks:
- low dividend sustainability;
- high payout ratios, indicating a likelihood of dividend cuts;
- high volatility, unacceptable for conservative investors.
Stocks that are cheap and offer high dividends often turn out to be yield traps – assets that appear attractive due to their dividend yields, which result from a sharp decline in current prices. It is possible that this decline is due to the company’s financial problems, meaning that shareholder rewards may soon be reduced.
Sector-specific risks are also important. For example, a portfolio composed solely of high yield monthly dividend stocks under $10 will not be well diversified across sectors. It will be significantly concentrated in companies that are sensitive to interest rates and commodity prices, such as mortgage REITs and oil and gas companies.
How to Evaluate Monthly Dividend Stocks Under $10
When selecting monthly dividend stocks that are under $10, it is important to pay attention to the following indicators:
- dividend yield;
- payout ratio;
- dividend coverage ratio;
- earnings growth;
- fundamental analysis multiples (P/E, ROE, etc.).
It is not sufficient to simply provide a cash flow analysis of the stock. The company’s financial health must also be assessed, as well as the probability of capital loss due to a decline in stock prices.
Let’s take a closer look at the key aspects of evaluating monthly dividend stocks under 10.
Dividend Yield Analysis
For dividend yield calculation, divide the annual dividend by the stock price. The current yield can be found by using the total payments made over the last 12 months. The amount of the forward yield is determined by multiplying the amount of the last dividend by the number of payments per year.
The dividend yield formula shows that the price-to-yield relationship is inverse: when the price falls, the yield increases. Therefore, this indicator should not be considered in isolation.
It is important to assess the yield sustainability of the capital income invested in the stock. To this end, analysts also examine dividend growth rates and stable payout periods.
Payout Ratio and Coverage
The payout ratio shows the proportion of a company’s net profit that it distributes to shareholders. The dividend sustainability is higher when the payout ratio is lower. When evaluating stocks, it is important to consider sector-specific benchmarks. However, average norms are not applicable to REITs and BDCs.
Other important indicators of financial stability and the ability to maintain dividends include earnings coverage and cash flow coverage ratios. These ratios show how many times a company’s net profit or free cash flow exceeds its dividend payments.
Financial Stability Indicators
When evaluating a company, it is important to consider not only its dividend history, but also its cash flow trends. A company’s balance sheet strength is indicated by the following factors:
- decreasing debt levels;
- revenue growth;
- earnings consistency.
Management quality is equally important for dividend investors. Optimally, company leadership should demonstrate consistent development policies and an understanding of the importance of shareholder income stability.
Top Monthly Dividend Stocks Under $10
The list of the best monthly dividend stocks is compiled using the following indicators:
- payout ratio;
- duration of continuous payments;
- dividend growth rates;
- Financial Score – a BeatMarket assessment that indicates a company’s fundamental strength.
The top dividend payers presented here are not investment recommendations. However, they can be used as a basis for your own analysis of monthly income stocks.
The table includes affordable dividend stocks with sustainable monthly dividends.
| Company name (ticker) | Market price | Dividend yield | Payout ratio | Dividend CAGR 5Y | Consecutive Years |
| U.S. Global Investors, Inc.(GROW) | $2.48 | 3.63% | 3.00% | 24.57% | 0 |
| Whitecap Resources Inc. (SPGYF) | $6.68 | 9.21% | 15.58% | 16.47% | 3 |
| Atrium Mortgage Investment Corporation (AMIVF) | $8.26 | 8.31% | 31.07% | 1.30% | 2 |
| Chemtrade Logistics Income Fund (CGIFF) | $8.02 | 6.27% | 21.10% | -11.27% | 1 |
| Freehold Royalties Ltd.(FRHLF) | $9.42 | 9.80% | 36.49% | 11.38% | 0 |
U.S. Global Investors, Inc. specialises in investments in global markets and niche sectors. The company has paid dividends continuously for 12 years.
Whitecap Resources Inc. is an oil and gas company that extracts oil and condensate, primarily from shale formations. It has made continuous payments for 12 years.
Atrium Mortgage Investment Corporation specialises in debt investments, providing mortgage loans for residential and commercial real estate in Ontario and Western Canada. It has consistently distributed a portion of its profits to shareholders for the past 13 years.
Chemtrade Logistics Income Fund supplies industrial chemicals and provides various services to manufacturers in the gasoline, paper and metals industries, as well as to water treatment companies. CGIFF shareholders have received dividends for 24 consecutive years. However, its stock price has almost halved over the past decade.
Freehold Royalties Ltd holds a portfolio of energy sector royalties. It has a 28-year track record of paying dividends. However, due to the cyclical nature of the industry, the size of these dividends is unstable.
REITs With Monthly Dividends Under $10
Most REITs ( Real Estate Investment Trusts) generate property income by leasing out properties. The majority of these are residential REITs that own residential properties.
Commercial REITs manage office buildings and industrial facilities, among others. These can include single-tenant properties or large shopping and office centres. Such companies typically operate with long-term leases and pass on all property-related expenses to the tenants.
A separate category is mortgage REITs. These companies generate income through investments in mortgage loans and other collateralized mortgage obligations, including residential mortgage backed securities (RMBS) and agency mortgage backed securities (MBS) issued by government-sponsored entities.
The companies listed in the table can be considered by an investor seeking to receive monthly REIT dividends.
| Company name (ticker) | Market price | Dividend yield | Payout ratio | Dividend CAGR 5Y | Consecutive Years |
| Dream Industrial Real Estate Investment Trust (DREUF) | $8.5 | 6.02% | 87.62% | 0.28% | 2 |
| Firm Capital Property Trust (FRMUF) | $4.27 | 11.41% | 67.54 | 2.26% | 12 |
| Orchid Island Capital Inc (ORC) | $7.06 | 20.40% | 304.55% | -21.40% | 0 |
| AGNC Investment Corp (AGNC) | $9.31 | 15.47% | 81.36% | -6.36% | 0 |
| Gladstone Land Corp (LAND) | $10.38 | 5.40% | 118.66% | 1.10 % | 3 |
BDCs and Income Funds Under $10
A Business Development Company (BDC) earns income through small business lending. Such a company owns a diversified portfolio of private debt investments. The allocation of capital to equity financing is a small percentage of the total.
Some income funds operate with private equity and senior secured loans. These are most often closed-end funds. Many open-ended mutual funds offer monthly income too, but they primarily earn money through investments in the bonds or stocks of large-cap companies.
The table below shows the business development companies that pay dividends every month.
| Company name (ticker) | Market price | Dividend yield | Payout ratio | Dividend CAGR 5Y | Consecutive Years |
| Oxford Square Capital Corp. (OXSQ) | $2.24 | 18.75% | 55.29% | -12.16% | 1 |
| Prospect Capital Corp (PSEC) | $3.15 | 17.14% | 21.18% | -0.85% | 0 |
| Ellington Credit Co (EARN) | $5.75 | 16.70% | 342.9% | -4.04% | 0 |
| Horizon Technology Finance Corp (HRZN) | $7.36 | 17.93% | 36.07% | 0.17% | 0 |
| PennantPark Floating Rate Capital Ltd (PFLT) | $10.19 | 12.07% | 34.17% | 1.53 % | 2 |
Of the listed companies, Prospect Capital Corp. has the most diversified investment portfolio. The company invests in sectors such as manufacturing, energy and consumer services. However, a loss was recorded in the previous quarter instead of net operating income. Additionally, the value of its cash and cash equivalents has decreased.
Ellington Credit Co., formerly Ellington Residential Mortgage REIT, has changed its name and area of focus. The management team has decided to concentrate on corporate secured debt obligations. The company posted this in April 2024.
Energy and Utility Stocks With Monthly Payments
Energy dividend stocks include shares in midstream companies, pipeline operators and power generation companies, among others. The commodity market exposure is represented by investing in such stocks. Therefore, investors need to have a good understanding of the industry and its inherent cyclicality.
The table below shows the top monthly energy dividends that can be bought for under $10.
| Company name (ticker) | Market price | Dividend yield | Payout ratio | Dividend CAGR 5Y | Consecutive Years |
| Permianville Royalty Trust (PVL)* | $1.86 | 7.12% | 57.31% | -22.47% | 0 |
| Tamarack Valley Energy Ltd. (TNEYF) | $3.56 | 3.13% | 10.81% | – | 2 |
| Whitecap Resources Inc. (SPGYF) | $6.68 | 9.21% | 15.58% | 16.47% | 3 |
| Freehold Royalties Ltd.(FRHLF) | $9.42 | 9.80% | 36.49% | 11.38% | 0 |
*Dividends have not been paid by the company since March 2025 due to operational issues and a lack of profit.
Investors interested in utility dividends may wish to consider Global Water Resources Inc. (GWRS). The company has paid dividends to shareholders for the past nine years. However, its CAGR 5Y is only 0.82%, and the forward dividend yield is 2.98%. Furthermore, EPS declined by 27.5% in the last fiscal year.
Building a Portfolio of Monthly Dividend Stocks Under $10
Effective portfolio construction involves several aspects. The first of these is risk management, which is achieved through diversification strategy by asset type and sector allocation.
The second aspect is dividend reinvestment. Many investors opt for an income strategy because it generates a steady cash flow, enabling them to increase the size of their positions.
Diversification Principles
Investing only in the cheapest monthly dividend stocks under 10 dollars is associated with high concentration risk in one or two sectors. Maintaining sector diversity and portfolio balance is therefore necessary. This will help risk mitigation of cash flow decline and significant asset value drawdowns.
The main approach is to create diversified income sources by adding stocks with quarterly dividends from other sectors. Additionally, for capital preservation, correlation reduction through assets from other classes is essential. One example would be bond mutual funds that distribute income to shareholders monthly.
Reinvestment Strategies
Dividend reinvestment is one of the most important factors in wealth building. It ensures passive income growth and compounding returns over decades.
Share accumulation can be simplified and automated through DRIP programs offered by companies and brokers. Dividend reinvestment is particularly important during bear markets, as it provides long-term growth of capital and helps to average out the cost per share.
Where to Buy Monthly Dividend Stocks Under $10
Stocks paying monthly dividends of less than $10 can be found on the NASDAQ and NYSE stock exchanges, as well as on the over-the-counter market. Access to these stocks is also provided by online brokers. Compared to traditional full-service brokers, their advantages include:
- commission-free trading or with minimal commissions;
- user-friendly trading platforms;
- informative stock screeners;
- numerous research tools for portfolio analysis.
However, discount brokers do not offer investment advice. They may also have limited capabilities when it comes to participating in IPOs, accessing foreign stock markets and offering other services.
Tax Implications of Monthly Dividend Stocks
For investors focusing on the highest paying monthly dividend stocks under $10, dividend taxation is a key consideration.
The simplest way to improve tax efficiency is to receive qualified dividends, which are taxed at long-term capital gains rates. However, dividends from REITs and some other companies do not meet IRS requirements and are therefore taxed as ordinary income. Another way to increase net income is through retirement accounts.
As monthly dividends can complicate tax planning, it is advisable to consult a specialist. Doing so can help you avoid making mistakes that could have a negative impact on your net investment income.
Conclusion: Are Monthly Dividend Stocks Under $10 Right for Your Portfolio?
Proper risk assessment is essential for long-term planning of wealth. It is important to be reminded that investment suitability of a stock and its portfolio fit within the risk level are more important than high yields and frequent payouts.
Monthly dividend stocks under 10 can form an important part of an aggressive investment strategy. They can also be used to achieve income goals for a moderate risk profile. However, they should only make up a small part of a well-diversified portfolio.
FAQ
What stocks pay best monthly dividends?
One of these stocks is Firm Capital Property Trust (FRMUF). The company offers a yield of 11.41% and has increased dividends for 12 consecutive years. Its current market capitalization is below net asset value. Second place goes to Whitecap Resources Inc. (SPGYF), which offers a dividend yield of 9.21%. It has increased dividends for three consecutive years and has made continuous payments for 12 years.
How to make $1,000 a month in dividends?
Relatively reliable monthly paying dividend stocks under $10 offer yields of up to 10%. To build a balanced portfolio with an average yield of 8%, an investor would need capital of around $150,000.
Which penny stock gives the highest dividend?
Orchid Island Capital Inc. (ORC) potentially provides more income per dollar invested than other companies that pay monthly dividends. Its forward dividend yield is 20.31%.
What is the best stock under $10?
This title could be awarded to Freehold Royalties Ltd. (FRHLF). Its financial score of 95 corresponds to the ‘very safe’ level. The company has paid dividends for the last 28 years.
Article Sources
- Baker, M., & Wurgler, J. (2004). “A Catering Theory of Dividends.” The Journal of Finance, 59(3), 1125-1165.
- Grullon, G., Michaely, R., & Swaminathan, B. (2002). “Are Dividend Changes a Sign of Firm Maturity?” Journal of Business, 75(3), 387-424.
- DeAngelo, H., DeAngelo, L., & Skinner, D. J. (2004). “Are dividends disappearing? Dividend concentration and the consolidation of earnings.” Journal of Financial Economics, 72(3), 425-456.
- Jiang, F., Ma, Y., & Shi, B. (2017). “Stock liquidity and dividend payouts.” Journal of Corporate Finance, 42, 295-314.
