15 Dividend Stocks for a Big-Cap Comeback

Editor's note: Jon D. Markman writes a weekly column for CNBC on MSN Money that is republished here on TheStreet.com. He's also a regular contributor to RealMoney, TheStreet.com's subscription site. If you'd like to see all of Jon Markman's RealMoney commentary, click here for information about a free trial.

---

With the speculative fever for the shares of small companies like Travelzoo (TZOO) and Sirius Satellite Radio (SIRI) capturing the public imagination these days, it might seem like a lousy time to consider anything but more of the same.

But the market gods work their magic in cycles, and very often the most popular group of stocks in one phase of the economic cycle is surpassed in a new calendar year by another that had grown passe.

In that vein, it may be time to go out on a limb and consider the possibility that the shares of dividend-paying large companies could be surprising leaders in 2005. That would be a shocker of sorts, as small-cap stocks have trounced their bigger brothers for five years running.

That's a great record, to be sure. But the market's partiality toward size is very streaky. In each of the six years before 2000, big-caps trounced small-caps. By late 1999, the little fellas were widely dismissed as inconsequential by the majority of investors -- just as big-caps are now.

Smaller domestic stocks tend to do well during global slowdowns, like the one the world experienced at the start of this decade, because they do not rely on overseas sales for their income.

Why would a small Minnesota-based barbecue restaurant chain such as Famous Dave's of America (DAVE) care about lousy consumer confidence in Germany if all of its rib-eaters are in the U.S.? Dave's shares have advanced 490% since 2000, a span that has seen the S&P 500 sink 20%.

David Beats Goliath S&P small-caps vs. the S&P 500
Year	% Change in S&P Smallcap Index	% Change in S&P 500
2004*	18.0%	6.8%
2003	37	26
2002	-15	-23
2001	6	-13
2000	11	-10
*Through Dec. 10 Source: MSN Money