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2 Top High-Yielding Stocks Under $10

By Rick Munarriz – Sep 10, 2020 at 4:15AM

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A small stock price doesn't mean a company can't pay a sustainable dividend. Here are two big names with small stock prices yielding better than 5% right now.

You don't need to pay a big price for a large payout. There are plenty of stocks trading in the single digits that continue to pay regular dividends. Some of the names -- and yields -- will surprise you.

Hewlett Packard Enterprise (HPE -1.11%) and Telefonica (TEF) are serving up yields north of 5% right now. They are recognized names globally, but a lack of top-line growth in recent years has scared off the investing community. Let's take a closer look at these two names to see why they're the among the top high-yielding stocks with share prices in the single digits. 

A stack of coins getting progressively higher leading to an illuminated light bulb.

Image source: Getty Images.

Hewlett Packard Enterprise: 5.1% yield

It's been five years since Hewlett Packard Enterprise was spun off from the iconic tech company to give its IT services and network security segment a chance to shine on its own. It hasn't done a lot of shining. Revenue has declined in all but one year of the spin-off's public tenure, and even the one outlier -- a 6.9% top-line uptick in fiscal 2018 -- wasn't worth bragging about.

Hewlett Packard Enterprise hasn't acted like a cloud-based rock star, and unlike most tech stocks that have rebounded sharply off their initial pandemic sell-off lows, this is one name that's only moved marginally higher since its late March bottom. A few recent disappointing reports haven't helped, but last month's fiscal third-quarter performance offers hope. Revenue and adjusted earnings topped expectations, and its annualized revenue run rate is now positive. 

Hewlett Packard Enterprise has proven that it's not worth mentioning among the market darlings of the cloud-computing revolution. However, with signs of things turning around and the shares fetching a mere 6.4 times next year's earnings estimates it has elbowed its way into the chatter about value stocks worth taking a closer look at these days.

Telefonica: 11.2% yield

Some of the highest-yielding stocks outside of the traditional hotbeds of utilities, REITS, and limited partnerships can be found in telecommunications. The industry is out of favor despite the global wireless migration and open-ended promise of 5G. Spain's Telefonica is an interesting name here given its plump yield and its wide global reach. Telefonica has a strong presence through Latin America and Europe. 

It's in the same boat as Hewlett Packard Enterprise as a big name that can't get its top line moving in the right direction. This will be the fifth consecutive year of declining revenue for Telefonica. There are glimmers of hope. Business is starting to turn around for Telefonica in Spain, and it's forecasting a return to organic growth come 2022. 

Hewlett Packard Enterprise and Telefonica aren't perfect. There are reasons for the shares trading this low right now. However, the low prices coupled with healthy yields make them compelling dividend stocks right now. 

Rick Munarriz owns shares of Telefonica. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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