Best Monthly Dividend Stocks Under $10

What if you could earn a small ‘paycheck’ from your investments every single month? This is possible with monthly dividend stocks, which are far more accessible than most people think.

Think of it like owning a tiny piece of a successful rental property; as an owner, you’re entitled to a cut of the profits. These companies share a portion of their earnings with stockholders on a regular schedule. You don’t need a fortune to begin building a monthly income portfolio, and this guide will show you how.

What Exactly is a Dividend? Your Slice of the Company’s Pie

A stock isn’t just a number on a screen; it’s a tiny slice of ownership in a real company. If you buy one share, it’s like owning a single brick in their giant headquarters. You are, officially, a part-owner.

As a part-owner, you can share in the company’s success. When a profitable company distributes some of its earnings to shareholders, that payment is called a dividend. It’s the business’s way of rewarding you for being an investor. While many companies pay dividends quarterly, some offer these payments every month, which is especially motivating when you’re just starting out.

Why Monthly Payments Beat Quarterly for Building Momentum

Receiving a small payment every month feels more rewarding than a quarterly one. This consistent cash flow is easier to track and can be a powerful motivator, making your investment journey feel like earning a steady side income. It shifts investing from an abstract event to a tangible reward you can see and feel every 30 days.

Beyond the mental boost, monthly payments have a small but mighty financial advantage: faster compounding. Think of it like a snowball rolling downhill. The sooner you receive a dividend, the sooner you can reinvest it to buy more shares. That new share then starts earning its own dividends, making your investment snowball grow a little faster. This cycle is the engine of building wealth.

The Hidden Danger: Why “Under $10” Can Be a Red Flag

It’s tempting to see a stock priced under $10 and feel like you’ve found a bargain. But in investing, a low price often comes with a hidden warning label. Think of it like a used car advertised for just $500. It could be a fantastic deal, or it could have serious engine trouble. Your job as an investor is to check under the hood.

A stock’s price is often low because the company itself is facing challenges, like losing money or struggling with too much debt. For a dividend investor, this presents an even bigger danger. A struggling company needs to save cash, and one of the first places it looks is the dividend. If the company reduces or stops its dividend—a “dividend cut”—your expected monthly income can vanish, and the stock price will likely drop even more.

The goal isn’t just to find the cheapest stocks. The mission is to find stable companies that can reliably afford their dividend payments.

How to Look ‘Under the Hood’ in 2 Simple Steps

You don’t need complicated formulas to check a company’s health. You can get a surprisingly good first impression by focusing on just two things to help you weed out the riskiest options.

1. Check the Dividend Yield.
The dividend yield is the annual dividend relative to the stock’s price, shown as a percentage. A $10 stock that pays $0.80 in dividends per year has an 8% dividend yield. This number helps you compare the income potential between stocks. Be careful—a ridiculously high yield (over 15%) can be a red flag that investors think the dividend is in danger of being cut.

2. Ask: Is the Business Stable?
Forget the stock for a second and think about the company. Does it sell something people need even when money is tight, like electricity or basic groceries? A company with a history of steady, predictable business is much more likely to keep paying its dividend than one with wild ups and downs.

This two-step process won’t guarantee a winner, but it will help you avoid the most obvious traps. Companies that pass this check often fall into specific categories built for generating income.

Where to Find Them: Meet the Landlords (REITs) and Lenders (BDCs)

Many income-focused companies are REITs, or Real Estate Investment Trusts. A REIT acts like a giant landlord, owning properties that collect rent, such as apartment buildings or shopping centers. By law, REITs must pay out most of their taxable income as dividends, which is why monthly dividend REITs are so common.

Another group you’ll encounter are BDCs (Business Development Companies). A BDC is a specialized lender that loans money to small and medium-sized companies, earning interest on those loans. Like REITs, BDCs must distribute most of their earnings, making monthly dividend BDCs another popular category for investors. Both business types are structured as income machines, designed to pass regular payments along to shareholders.

Putting It All Together: Examples for Your Research

The companies below are not recommendations to buy, but clear examples of REITs and BDCs that often trade under $10. They can be a great starting point for your own research using a stock’s ticker symbol—its unique code on the stock market.

Here are a few examples to illustrate the concepts we’ve discussed:

• Prospect Capital (PSEC): A Business Development Company (BDC) that provides loans and makes equity investments in middle-market companies.
• Gladstone Commercial (GOOD): A Real Estate Investment Trust (REIT) that owns a portfolio of office and industrial properties across the United States.
• Generation Income Properties (GIPR): Another REIT, this one focusing on single-tenant retail properties in major U.S. markets.

Again, this is not a shopping list. A stock price under $10 often comes with higher risk, and past dividend payments are no guarantee of future ones. Use these as real-world case studies while you learn.

A Simpler Alternative: Buying a Whole Basket with an ETF

Picking individual stocks can feel like a high-stakes guessing game. An Exchange-Traded Fund, or ETF, offers a simpler way. Think of an ETF not as a single stock, but as a pre-packaged basket containing many different stocks, all bundled into one investment.

The power of an ETF is diversification—not putting all your eggs in one basket. If you own just one company and it cuts its dividend, your income stream dries up. But if you own an ETF that holds 50 companies, one bad apple won’t spoil the whole bunch. This instantly reduces your risk.

Monthly dividend ETFs do the work for you, collecting a wide range of dividend-paying stocks into a single, affordable package. This offers a great way to build a diversified monthly income portfolio without having to research each company one by one.

Your Next Step: From Learning to Your First Potential Dividend

The most critical tool for a new investor is the ability to ask if a business is stable enough to afford its dividend, not just if its stock is cheap. Let that question guide every decision as you explore affordable monthly dividend stocks.

Remember to check that the dividend yield is reasonable, understand what the company does, and respect that a low share price often signals higher risk.

To buy any stock, you need a brokerage account, which is like a special bank account for investments. Many firms let you open one online for free. Taking this practical step is how you can begin turning your knowledge into action.