There's nothing better than a small-cap stock that pays a nice dividend. There's usually a certain amount of risk involved when you invest in a small-cap stock, but a stock that pays a steady dividend takes some of that risk out of the equation. Small-caps that pay dividends make up an overlooked area of investing. In addition to reducing risk, these types of stocks allow diversification into smaller companies with the advantage of a dividend yield to help accelerate the return of capital. When screening for small-caps with high yields at Stockpickr, we used a capitalization range of $250 million to $500 million. This eliminates real estate investment trusts, closed-end funds and oil income trusts. The Stockpickr portfolio of the highest-yielding small-cap stocks is worth a look. Also available on Stockpickr is a portfolio set up by one of my favorite bloggers, The Microcap Speculator. He has created a portfolio that details micro-caps with dividends. There are a number of small-cap stocks with high yields from various industries to choose from. The highest yielder is U.S. Shipping ( USS), which offers a dividend yield of 9.8% with a capitalization of about $330 million. The company transports petroleum with its maritime fleet of tank vessels, and the stock has a fairly high price-to-earnings ratio of 42.4. Quarterly earnings at U.S. Shipping were up 37% year over year on a 13% increase in revenue. The company has paid the same dividend, 45 cents per share, for the past nine quarters in a row. The company is also on a list we set up called the 9% Yield Club, which includes Nelson Peltz investment vehicle Deerfield Triarc Capital ( DFR). How does billionaire Peltz get such yields? We track the Nelson Peltz portfolio here, which includes holdings such as Wendy's ( WEN) and H.J. Heinz ( HNZ).
| Which small-caps with steady dividends would you consider investing in? |
Another small-cap with a high yield is Standard Register ( SR), a Dayton, Ohio, company that's been around since 1912. This provider of custom-printed documents and labels has a dividend yield of 7.6%. The company has a forward P/E of 22 and a PEG ratio of 4.8. The stock has paid quarterly dividends in the amount of 23 cents per share for the past 29 quarters in a row. Finally, there's Cherokee ( CHKE), a licensor of brand names and trademarks for clothing, home items and sporting goods. It pays a yield of 6.7% and has a favorable trailing P/E of 11.6 and a PEG ratio of 1.5. The company saw an increase of about 375% in quarterly earnings year over year. Cherokee has increased its dividend every year, and the quarterly dividend was just raised from 60 cents to 75 cents per quarter. The company is also on the TSC Ratings Top 5 Small-Cap Stocks list. A list of all the high-yield small-caps paying above 5% called the highest-yielding small-caps can be found at Stockpickr. For other dividend resources, check out the following:
- Stockerblog's guide to dividends, a list of 200 stocks paying monthly dividends.
- The top 100 highest-yielding stocks that pay monthly dividends.
- The Microcap Speculator's list of micro-caps with dividends.
- Dividends Are Important, a list of companies that pay dividends and also have very low payout ratios so that they can handle a decline in revenue before having to cut their dividends.
- European Banks With Dividends, a list of names that offer a little diversification outside of the U.S. dollar.
- Some closed-end funds that pay hefty dividends.
- Income Deposit Securities, a list of hybrid stocks/bonds that pay high yields.
- A list of high-yielding tobacco stocks.
- Finally, there's the Morgan Stanley: A Yen for Yield list. By way of explanation, note the following from the Jan. 22, 2007, issue of Barron's: "Morgan Stanley's chief U.S. investment strategist, Henry McVey, says the Pension Protection Act of 2006 'adds legs' to his research team's Brave New World."