Fortunately, you don’t need substantial amounts of money to fatten your dividend income. You can take positions in two high-yield stocks that are priced below $10. Although they are small-cap stocks, the combination is good for generating income.
The shareholder return model
Surge energy (TSX:SGY) has attracted investors due to its better-than-expected performance (+34.8%) so far in 2025 in a challenging environment. At $7.32 per share, you can enjoy the 7.2% dividend yield. Furthermore, the payout frequency is monthly and not quarterly.
As with most energy stocks, commodity price volatility is a perennial risk. The $719.4 million oil-focused exploration and production (E&P) company operates high-quality conventional oil reservoirs. Operations are concentrated in Western Canada, mainly in Sparky and South Saskatchewan, two of the four largest oil companies in Canada.
In the first three quarters of 2025, net income was $47.4 million, compared to the net loss of $51 million in the same period in 2024. Notably, free cash flow rose 29% to $104.9 million. Under the shareholder return model and FCF framework, Surge strategically allocates cash flow between targeted capital projects and shareholder returns. Any excess free cash flow is used to reduce net debt.
The strong focus on the weighting of oil and liquids results in higher realized prices compared to producers that produce a lot of natural gas. Surge’s conventional reservoirs have low decline rates, a key to maximizing FCF. Finally, there is the predictability of long-term production thanks to the long-lived drilling resources (12 years) in the company’s core areas.
Consistent income provider
Doman Building Materials Group (TSX:DBM) is a distributor of building materials and home renovation products serving North American customers. The company’s operating exposure of $822.8 million in both Canada and the U.S. mitigates the impact of regional economic downturns.
If you invest today, the stock price is $9.43 per share, while the dividend offer is 6%. In terms of dividend payments, DBM has kept investors healthy for 61 consecutive quarters, despite economic cycles.
The focus on renovation keeps the company resilient. Strong sales to home improvement chains and independent lumberyards indicate a robust repair and renovation market. According to management, the R&R segment is generally more stable than the new construction market. It also serves as a layer of defense when the housing market is in a slump.
Doman is Canada’s only fully integrated national distributor in the building materials sector. This is a competitive strength because the company has complete control over the supply chain. In addition, the vertical model allows for better supply chain management, better control of product quality and more competitive pricing.
In the third quarter of 2025, consolidated revenues and net profit increased 20% and 24% to $795.1 million and $18.1 million, respectively, compared to the third quarter of 2024. Amar S. Doman, Chairman of the Board of Directors, said: “Our balance sheet as of September 30 is strong and provides a strategic platform for our continued success.
Money making team
Surge Energy and Doman Building Materials are an ideal money-making team. The low correlation between their main sources of income reduces risk.
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