Most dividend investors seek solid passive income streams from quality dividend stocks. Passive income is a steady stream of unearned income that doesn’t require active work. Shared ideas for earning passive income include investments such as dividend stocks, bonds, and mutual funds, as well as real estate and additional income-producing side hustles. The more passive income helps cover rising costs (such as mortgages, insurance, taxes, and other expenses), the easier it is for investors to set aside money for future needs as they prepare for retirement. Dependable recurring dividends from quality, high-yield stocks are a recipe for success. When those stocks trade at $10 or below, investors can purchase more shares, which in turn will deliver higher income.
While most of Wall Street focuses on large and mega-cap stocks, which offer a degree of safety and liquidity, many investors are limited in the number of shares they can buy. Many of the most significant public companies, especially the technology giants, trade at prices of up to $1,000 per share, while others trade in the low to mid-hundreds. It’s difficult to get decent share count leverage at those steep prices. For low-price stock skeptics, many of the world’s biggest companies, including Apple, Amazon, Netflix, and Nvidia, once traded in the single digits.
We screened our 24/7 Wall St. research database for smaller-cap companies that could deliver patient investors significant returns through 2026 and beyond. Five companies that hit our screens also pay high-yield dividends, making the total return potential even more intriguing.
Why do we cover stocks under $10?
We enjoy scouring the stock market for the next big winner, as it allows investors to buy larger positions in lower-priced stocks and potentially achieve a massive gain, like Nvidia or Netflix. Over the years, we have written about stocks like Zynga, which Take-Two Interactive acquired. Northern Oil & Gas was under $3 when we started covering the company. It underwent a reverse split and subsequently rose much higher. Add in dependable dividends, and total return potential is high.
Adamas Trust
Once known as New York Mortgage Trust, this mortgage real estate investment trust (REIT) pays a massive 9.54% dividend. Adamas Trust (NASDAQ: ADAM) engages in the business of acquiring, investing in, financing, and managing primarily mortgage-related single-family and multifamily residential assets.
Its objective is to deliver long-term stable distributions to its stockholders. Its investment portfolio includes credit-sensitive single-family and multifamily assets, as well as more traditional fixed-income investments that provide coupon income, such as agency residential mortgage-backed securities (RMBS).
The company’s targeted investments include residential loans, including business purpose loans; agency RMBS; non-agency RMBS; structured multifamily property investments, such as preferred equity in, and mezzanine loans to, owners of multifamily properties; other mortgages, such as residential housing- and credit-related assets, and strategic investments in companies from which it purchases, or may in the future purchase, its targeted assets.
Aegon
This Dutch insurance and financial services group will transition its U.S. headquarters to the Transamerica brand by the end of 2027, paying a solid 4.78% dividend. Aegon (NYSE: AEG | AEG Price Prediction) is an international financial service holding company. The company offers products and services across insurance, long-term savings, banking, and asset management.
In the United States, the company operates under two brands: Transamerica and World Financial Group Insurance Agency, which offer life insurance, investments, and retirement solutions. In the Netherlands, Aegon focuses on life insurance, long-term savings, pension and annuity solutions, and mortgages.
Meanwhile, in the United Kingdom, Aegon serves as an investment platform, providing a range of investment, retirement solutions, and protection products to individuals, advisers, and employers. And in China, the company owns a stake in Aegon THTF Life Insurance Company, which offers life insurance solutions through a network of branches, primarily in eastern China. It also has a partnership with Banco Santander to distribute life, health, and non-life insurance products through the bank’s branches in Spain and Portugal.
Capitol Federal Financial
This small retail bank in Kansas pays a reliable 4.05% dividend. Capitol Federal Financial (NASDAQ: CFFN) is a unitary savings-and-loan holding company. It provides a full range of retail banking services through its subsidiary, Capitol Federal Savings Bank. This federal savings bank has 44 traditional and four in-store banking offices serving the metropolitan areas of Topeka, Wichita, Lawrence, Manhattan, Emporia, and Salina, Kansas, and portions of the Kansas City metropolitan area.
The bank attracts deposits primarily from the general public and businesses. It invests those funds primarily in permanent loans secured by first mortgages on owner-occupied, one-to-four-family residences and in commercial loans.
It offers an array of retail and business deposit products and services. These products include checking, savings, money market, certificates of deposit, and retirement accounts. The bank’s deposit services are provided through its network of traditional branches and retail in-store locations, as well as its call center.
PennantPark Floating Rate
Often overlooked by Wall Street, PennantPark Floating Rate Capital (NYSE: PFLT) is a business development company that invests in U.S. companies and offers a substantial monthly dividend yield of 16.9%. PennantPark seeks to invest in floating-rate loans through private, thinly traded, or small-cap public middle-market companies. It primarily invests in the United States, with limited exposure to non-U.S. companies.
The fund typically invests between $2 million and $20 million, and it also invests in:
- Equity securities
- Preferred stock
- Common stock
- Warrants or options received in connection with debt investments or through direct investments
It primarily invests between $10 million and $50 million in senior secured loans and mezzanine debt. It seeks to invest in companies not rated by national rating agencies. The fund invests 30% in non-qualifying assets, such as:
- Investments in public companies whose securities are not thinly traded or do not have a market capitalization of less than $250 million
- Securities of middle-market companies located outside of the United States
- High-yield bonds
- Distressed debt
- Private equity
- Securities of public companies that are not thinly traded
- Investment companies as defined in the Investment Company Act of 1940
Under normal conditions, the fund expects at least 80% of its net assets plus any borrowings for investment purposes to be invested in floating-rate loans and investments with similar economic characteristics, including cash equivalents invested in money market funds. It expects senior secured loans to represent 65% of its portfolio.
Vaalco Energy
With strong overseas exposure and a solid 4.99% dividend, this is an interesting energy idea. Vaalco Energy (NYSE: EGY) is an independent energy company with a diverse portfolio of production, development, and exploration assets across Gabon, Egypt, Cote d’Ivoire, Equatorial Guinea, Nigeria, and Canada. It is engaged in the acquisition, exploration, development, and production of crude oil, natural gas, and natural gas liquids.
The company holds a working interest in and operates the Etame PSC, which covers the Etame Marin block offshore Gabon in West Africa. The Etame Marin block covers an area of about 46,200 gross acres. The company holds an interest in an undeveloped offshore block in Equatorial Guinea, West Africa.
In Egypt, its interests span two regions: the Eastern and Western Deserts. In Harmattan, Canada, it owns production and working interests in Cardium light oil and Mannville liquids-rich gas assets. It also owns a working interest in the Block CI-40 and CI-705 block offshore Côte d’Ivoire in West Africa.
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