Low-price stocks typically turn heads with their potential for diversification and the allure of a robust dividend yield.
In the quest for investment opportunities, stocks under $10 present a compelling proposition for those looking to build a diversified portfolio. These stocks offer the prospect of significant returns and come with the advantage of dividend payments. Additionally, it’s critical to approach these opportunities with a blend of excitement and caution. The reality is that companies facing financial difficulties often resort to cutting dividend payments as a preemptive measure, making some low-priced dividend stocks less secure. Therefore, investors interested in exploring the potential of cheap dividend stocks must diligently evaluate the business fundamentals of these businesses.
All told, here are three stocks that stand out for their strong foundational attributes, demonstrating it’s possible to find investments offering both growth potential and financial stability.
Banco Santander (SAN)
Bank stock Banco Santander (NYSE:SAN) is an excellent value pick in its niche on the back of its strong fundamentals, attractive valuation and eye-catching shareholder rewards. The bank’s robust net income margin of 24.75% year-over-year (YOY) more than doubles the sector median, signaling a mastery of cost management. Additionally, a return on common equity of 12% stands as a testament to the bank’s efficacy in leveraging shareholder equity, cementing its status as a sound investment.
Furthermore, it boasts a proactive shareholder rewards program through a $1.38 billion buyback initiative, paired with a generous 4.4% dividend yield. With such a strategy, the bank demonstrates its commitment to shareholder value and confidence in its financial health and prospects. Banco Santander’s stock offers a trifecta that’s tough to overlook for investors seeking a blend of value, growth and income.
Kinross Gold (KGC)
Kinross Gold (NYSE:KGC) shines bright in the investment universe with a 34% bump in its stock price over the past year. However, it remains a hidden gem, priced roughly 25% below the sector’s median price-to-earnings (P/E) ratio of 11.6. This undervaluation and a solid 2.34% dividend yield present a golden opportunity for value-seeking investors. The company’s recent earnings outperformed estimates, with non-GAAP earnings per share (EPS) of 11 cents, while sales grew by 3.7% year-over-year (YOY) to $1.12 billion. It also enjoyed a significant 130% surge in free cash flows for the full year.
With gold’s lustrous rise to over $2,000 an ounce and a 10% year-to-date increase, Kinross is poised to capitalize on this uptrend. Anticipated monetary policy changes and global tensions could send gold prices soaring, with J.P. Morgan projecting a climb to $2,175 per ounce by late 2024. Hence, KGC stock is on the path to long-term growth and delivering for more attractive dividends.
Nordic American Tankers (NAT)
Nordic American Tankers (NYSE:NAT) sails ahead as one of the top dividend contenders under $10, with a tempting forward P/E ratio of 8.3 times. Anchored by a robust dividend yield of 5.61% that has shown growth for two consecutive years, NAT stock stands out as a sturdy investment in its niche. As a seasoned operator of crude oil tankers, Nordic American is in an excellent position to weather the geopolitical troubles, with firm day rates expected to buoy the company’s stellar free cash flows.
The company’s solid forward bookings for the fourth quarter of 2023 are marked by roughly 73% of spot voyage days locked in at a lucrative average time-charter equivalent of $43,160 per day per ship. The scarcity of their tanker types gives them the leverage to negotiate favorable rates, steering towards a horizon of solid performance and dividends. For investors looking to captain a dividend-rich portfolio, Nordic American Tankers presents a voyage worth taking on.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines