It invests in a wide array of companies, from hotel operators to tech firms to energy companies to manufacturers. The portfolio is quite diversified, and as a result, PennantPark has been able to really cash in on the tailwind of resurgent economic growth around the U.S. in the last year. And as PNNT investments pay off, those profits are passed through via a 12-cent quarterly dividend that provides some extra cash on top of share values, which are up more than 40% in 2021. Dividend yield: 7.4% Prospect Capital Corp. ( PSEC ) Next up among the best cheap dividend stocks to buy under $10 is Prospect Capital, also a BDC. Being a BDC means it operates as a kind of publicly traded private equity firm that invests in other businesses and then passes on a share of the profits to shareholders. And lately, the PSEC portfolio has shown a lot of potential, with gains of nearly 50% in 2021.