Top 10 Monthly Dividend Stocks Under $10 in the USA

Is your savings account earning just pennies? It’s a common frustration to see your hard-earned money barely grow, especially when costs are rising. Your money is safe, but it isn’t actively working for you.

Imagine putting that money to work where it could generate a small, regular monthly cash flow—almost like collecting rent from a tiny property you own. This is the core idea behind monthly dividend stocks, where companies send you a cash reward for being a part-owner.

The goal is to slowly build a source of passive income, which is money you don’t have to clock in for. You don’t need a fortune to get started; many of these investments can be purchased for less than the price of lunch, creating an accessible first step into the market.

Building a passive income portfolio is a learning journey, not a get-rich-quick scheme. That ‘under $10’ stock might seem like a bargain, but it could also be a warning sign. This guide will help you understand the basics so you can begin investing with confidence.

What is a Dividend? Your ‘Reward’ for Owning a Piece of a Company

When you buy a stock, you become a part-owner of a real company. This is called being a shareholder. As a “thank you” for your investment, some companies share a portion of their profits directly with you. This cash payment is known as a dividend.

Think of it like owning a tiny piece of a rental property. The stock is the property, and the dividend is your small share of the rent check. Many people are drawn to stocks that pay monthly dividends because the potential for a regular, predictable income stream is very appealing.

Crucially, dividends are a reward, not a promise. If a company has a tough year, it can reduce or even eliminate its dividend to save money. This is an important risk to remember before jumping into stocks just because their price is low.

A Critical Warning: Why ‘Under $10’ Is a Red Flag, Not a Bargain Bin

It’s tempting to look at a stock priced under $10 and think, “What a deal!” In most parts of life, a low price means a bargain. But in investing, a cheap stock price is often a warning sign that the company might be in trouble. Understanding the risks of investing in low-priced stocks is just as important as the potential rewards.

Imagine you buy a stock for $8. Over the year, it pays you $0.80 in dividends—a 10% return. But what if the company performs poorly and its stock price falls to $6? You gained 80 cents in cash, but you lost $2 on the value of your share. This loss on the stock’s price is called a capital loss, and it completely erased your dividend income.

This highlights the most important number to watch: your total return. It’s the combination of your dividend gains and any change in the stock’s price. If you only focus on a high dividend, you’re seeing half the picture. A company offering a huge dividend might be trying to attract investors because its stock price is falling fast. This is one of the biggest traps for new investors looking at high-yield stocks under $10.

So, are monthly dividend stocks a good investment? They can be, but you must be careful not to get lured in by a low price tag alone. Before you consider buying any stock, especially a cheap one, it’s critical to have a framework for spotting these risks.

Your 3-Point Safety Checklist Before Buying Any Cheap Dividend Stock

Now that you understand the risks, how can you spot a stable company and avoid a dangerous one? Instead of getting lost in complicated financial reports, you can use a simple safety checklist. This isn’t a guarantee of success, but it’s a powerful first step in filtering out the riskiest options.

Before you consider any low-priced stock, run it through these three quick tests:

1. The History Test: Does the company have a track record of paying a dividend? A company that has consistently paid—and ideally, grown—its dividend for at least 3-5 years shows stability. A new or inconsistent dividend is a yellow flag.
2. The “Makes Sense” Test: Can you explain what the company does in one simple sentence? If you don’t understand how it makes money (e.g., “it owns apartment buildings and collects rent”), it’s best to stay away.
3. The “Too Good to Be True” Test: Is the dividend yield drastically higher than similar companies? A 15% yield might seem great, but if its competitors are all paying around 5%, that high number is often a major warning sign that investors expect a dividend cut or a price drop.

This checklist is your basic due diligence. It helps you move beyond a tempting price tag and start thinking like a true investor—focused on quality and sustainability. With this framework in mind, let’s look at some stock categories that often pass these initial tests.

The List, Part 1: Monthly Payers From the World of Real Estate (REITs)

Have you ever wished you could own a rental property and collect a check each month? For most people, buying an entire building is out of reach. But what if you could buy a tiny piece of hundreds of properties for less than the cost of lunch? That’s the idea behind a special type of company.

Our first category of affordable monthly dividend payers is Real Estate Investment Trusts (REITs). A REIT is a company that owns and operates income-producing real estate—think apartment complexes, shopping centers, or office buildings. When you buy a share of a REIT, you become a fractional owner of that entire portfolio.

REITs are popular for monthly cash flow because of a special rule: by law, they must pay out at least 90% of their taxable income to shareholders as dividends. This structure often turns them into powerful dividend machines, with many choosing to pay those dividends out monthly.

For example, you can find REITs that own portfolios of single-family homes and collect rent. Others specialize in owning the mortgages on residential properties, earning income from the interest paid on those loans. Both business models pass the “Makes Sense” test from our safety checklist—they earn money in a way that is easy to understand.

Investing in these companies allows you to participate in the real estate market without ever having to be a landlord yourself. Next, we’ll look at companies that act like banks for other businesses.

The List, Part 2: Companies That Invest in Other Businesses (BDCs)

While REITs let you act as a landlord for big properties, another type of company lets you act as a bank for growing businesses. This category includes some of the highest-yielding monthly dividend stocks under $10 you can find.

They are called Business Development Companies (BDCs). Think of a BDC like the show Shark Tank. These special companies provide money—either through loans or by buying a small piece of ownership—to small and medium-sized businesses that need capital to expand.

How does this generate income for you? It’s straightforward. When a BDC lends money, it collects interest payments. When it buys an ownership stake, it can profit if that business succeeds. That income is the source of your potential monthly dividends.

Much like REITs, BDCs have a special tax structure requiring them to pay out at least 90% of their profits to shareholders. This rule is why BDCs are often popular with income-focused investors. Companies like Prospect Capital (PSEC) and Gladstone Capital (GLAD) operate on this model, turning profits from business lending into regular dividend checks for their investors.

In short, where REITs let you invest in a portfolio of properties, BDCs let you invest in a portfolio of businesses.

Rounding Out the List: Other Affordable Monthly Dividend Payers

We’ve seen how to invest in properties with REITs and businesses with BDCs. But the search for affordable monthly dividend payers includes another popular category: professionally managed funds designed specifically to generate income.

These are often Closed-End Funds (CEFs). Think of a CEF as a pre-built investment basket. A manager fills it with different income-producing assets, like a mix of stocks and bonds, and you can buy a single share of that basket. The income collected from all those different investments is then passed along to you, often monthly.

For example, certain funds hold a collection of high-yield bonds or other dividend stocks with the primary goal of creating a steady payment stream. This is another tool for building a passive income portfolio, as it instantly spreads your money across many assets instead of betting on just one company.

With these categories in mind, the real work of your own research begins. A low stock price does not equal a safe investment, so treat this list as a starting point for learning, not a shopping list.

How Do You Actually Buy These Stocks? Your First 3 Steps

So you’ve done your research and have a stock in mind. To purchase a share, you can’t use your regular bank account; you’ll need a specific type called a brokerage account. Think of it as an account designed purely for buying and selling investments like stocks. Getting started is simple, and reputable firms like Fidelity, Charles Schwab, and Vanguard offer accounts with no minimum deposit.

Once your account is set up, buying your first share boils down to just three steps:

1. Fund Your Account: Transfer money from your bank, just as you would to pay a bill online.
2. Find the Stock: Search for the company using its unique ticker symbol—a short code like a nickname (for example, Ford’s is “F”).
3. Place Your Order: Enter the number of shares you want and click “Buy.”

That’s it—you are officially a shareholder! While buying individual stocks puts you in direct control, some beginners prefer a path that spreads their money out automatically.

A Safer Path: Getting Monthly Income with ETFs Under $20

Putting all your money into a single stock can feel like betting on one horse to win a race. What if there was a way to bet on several horses at once? That’s the core idea behind an Exchange-Traded Fund, or ETF. Think of an ETF as a pre-packaged basket of dozens, or even hundreds, of different stocks that you can buy with a single click.

This strategy is called diversification, and it’s one of the most important concepts for any new investor. It’s the classic advice of not putting all your eggs in one basket. If one company inside the ETF has a bad month, the success of the other companies can help balance it out. This built-in safety net is a major reason why many people choose ETFs when building a passive income portfolio.

For those wondering if monthly dividend stocks are a good investment, an ETF can be a less stressful starting point. You can find some of the best monthly dividend ETFs under $20, which hold a collection of companies that all aim to pay dividends. Instead of researching ten individual companies, you buy one fund that does the work for you.

Ultimately, this approach offers a powerful combination of simplicity and reduced risk, making it an excellent tool as you move from learning about dividends to actually building an income stream.

Your Next Step: From Learning About Dividends to Building Your Income

While you may have come looking for a simple list of cheap stocks, you’re leaving with something more valuable: the ability to see both the opportunity and the risk. Now you understand the basic concepts and can ask the right questions about where a company’s dividend money comes from.

This new understanding is your foundation. Building a passive income portfolio requires balancing the excitement of regular cash flow with the wisdom to question why a stock is cheap. Your goal is not to get rich overnight, but to educate yourself and grow your knowledge one step at a time.

Your journey starts with curiosity, not a large investment. Pick one company or fund type from this guide and simply learn more about it. If you do decide to invest, consider starting with an amount you see as tuition for your financial education. Each small, informed step you take is how true confidence is built.