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?
Answer Here

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