Cheap Dividend Stocks Under $20
100 stocks · Updated May 9, 2026
Cheap dividend stocks combine the income appeal of dividend yields above 2% with accessible share prices under $20, making them popular among income investors building positions with limited capital. While low share price alone is not a value indicator, this screen targets dividend payers with real yield — filtering for genuine cash distributions rather than nominal dividends. Investors should verify dividend sustainability by checking payout ratios and underlying cash flow coverage.
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Frequently Asked Questions
Are high dividend yields on cheap stocks reliable?
Not always — a very high yield on a cheap stock can be a "yield trap" where the dividend is unsustainable. The yield appears high because the stock price has fallen, and the dividend will likely be cut. Always verify with payout ratio and free cash flow coverage.
What is a sustainable payout ratio?
A payout ratio below 60% of earnings (or preferably free cash flow) is generally considered sustainable for most industries. REITs are an exception — they distribute 90%+ of income by law and are analyzed on FFO-based payout ratios instead.
What sectors commonly offer cheap dividend stocks?
MLPs, BDCs (Business Development Companies), mortgage REITs, telecom companies, and some energy producers often have both low per-share prices and high dividend yields. Each has specific risks to evaluate.
How does dividend reinvestment work for cheap stocks?
DRIP (Dividend Reinvestment Plans) allow dividends to automatically purchase additional fractional shares. For cheap stocks with high yields, DRIPs can accelerate compounding significantly — each dividend reinvestment buys a larger fractional stake.