NEW YORK ( TheStreet) -- Investors love dividend stocks.
Companies offering strong dividends typically are in the financial services, materials and utilities sectors. But these small-cap stocks with strong dividends span a variety of sectors.
The thing with small-cap stocks is that you need to be very careful when investing in them: They can be very volatile and investors who invest in these kinds of small stocks often do poorly.
That's why we generated these picks using TheStreet Ratings, TheStreet's proprietary ratings tool.
The 11 stocks have buy ratings with B- rating or better. They also have the highest annual dividend yields in their various sectors, according to TheStreet Ratings. Check out which stocks made the list. And when you're finished be sure to read about which large-cap oil stocks you should sell immediately.
TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.
Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year. Note: Reports are dated Apr. 26, 2015. Year-to-date returns are based on April 27, 2015 closing prices.
11. United Bancorp Inc. (UBCP)
Market Cap: $39.3 million
Sector: Financial Services/Regional Banks
Annual Dividend Yield: 4.58%
Rating: Buy, B-
Year-to-date return: -2.5%
United Bancorp, Inc. operates as the bank holding company for The Citizens Savings Bank that provides commercial and retail banking services to individuals, businesses, and other organizations in Northeastern, Eastern, Southeastern, and South Central Ohio.
"We rate UNITED BANCORP INC/OH (UBCP) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins, growth in earnings per share and attractive valuation levels. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Commercial Banks industry average. The net income increased by 22.4% when compared to the same quarter one year prior, going from $0.60 million to $0.73 million.
- The gross profit margin for UNITED BANCORP INC/OH is currently very high, coming in at 83.08%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.83% is above that of the industry average.
- UNITED BANCORP INC/OH has improved earnings per share by 25.0% in the most recent quarter compared to the same quarter a year ago. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, UNITED BANCORP INC/OH increased its bottom line by earning $0.53 versus $0.52 in the prior year.
- UBCP, with its decline in revenue, slightly underperformed the industry average of 0.4%. Since the same quarter one year prior, revenues slightly dropped by 3.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: UBCP Ratings Report