Investors usually dig deeper into the market the more they want to speculate, but that habit can blind you to steady dividend payers. They’re rare, but they exist.
A single-digit price tag does not always signal trouble. Some companies trade below $10 simply because they are small and overlooked, not because they’re inherently risky.
These ideas are not for everyone. Anyone who needs the ticker to pop next quarter to beat a benchmark should stick with the crowded names. The sweet spot is the investor who wants income today, has the patience to let compounding do the heavy lifting, and does not mind looking a little off the beaten path. If that sounds like you, the following three stocks deserve a spot on your watch list:
BAB Inc (BABB)
BAB Inc (OTCMKTS:BABB) is a small-cap franchisor that sells bagels, muffins, and coffee. The company collects steady franchise fees and ongoing royalties from around 60 Big Apple Bagels and My Favorite Muffin locations, plus four licensed units scattered across the U.S.
Franchisees pay a 5% royalty on net sales, buy proprietary muffin mix and Brewster’s coffee from the company, and contribute to a marketing fund that BAB administers.
Because BAB’s capital requirements are limited to supporting franchisees rather than building stores, free cash flow is high relative to sales, and the balance sheet has $2 million of cash vs. $300k in debt. The free cash flow margin is 20.53%, better than almost 95% of companies in the consumer packaged goods industry.
BABB comes with a 4.09% dividend yield and a payout ratio of just 57%. The payout ratio has historically been near 67%, so it’s likely that BAB Inc could increase its dividends soon.
The stock itself has done quite well and is up 16.7% year-to-date.
Information Services Group (III)
Information Services Group, or ISG (NASDAQ:III) is a niche technology research and advisory firm that helps large enterprises negotiate, benchmark, and govern IT and business-process outsourcing deals. The company also crafts cloud automation and AI adoption plans and guides the roll-out.
This latter part is the most prospective part of the business and has contributed to the stock surging 67.7% year-to-date.
It looks like a stable dividend payer today with a boring consulting-esque business, but investors are quickly seeing it as an AI play due to management re-orienting the business towards helping other businesses adopt AI.
The AI advisory focus could turn it into a hot growth stock.
And in the meantime, you can sit on its 3.3% dividend yield. You’re paying less than 10 times operating cash flow for the stock, and the dividend is well-covered with the cash ISG generates.
Epsilon Energy (EPSN)
Epsilon Energy (NASDAQ:EPSN) explores for and produces natural gas and oil. It also has a midstream arm.
Crude oil prices have been declining in the past year, down 19%, whereas natural gas prices have also been dwindling. American oil companies generally start breaking even above $40 a barrel, and continuing OPEC production increases seem to be aimed at pushing American producers out.
EPSN stock has been down 27.3% in the past six months as investors have become pessimistic, but the company has high margins that can help it pay dividends even if oil prices go lower.
The EBITDA margin is 50.6%, better than almost 81% of industry peers. The cash also covers the company’s debt nearly 24-to-1. On top of that, management has done regular buybacks, with outstanding shares falling from 26.79 million in 2019 to 22 million in Q2 2025.
The EIA expects Brent crude to be at $62 per barrel in Q4 2025 and $52 per barrel in 2026. Epsilon can comfortably keep paying dividends at these prices. The decline is likely priced in as the stock has dropped despite Q2 revenue and profits rebounding by 59% year-over-year and 30.76% year-over-year, respectively.
You get a 5.31% dividend yield, plus a 3-year average share buyback ratio of 2.4% annually.
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