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Author: Don Obrien

10 Dividend Stocks for the Small-Cap Investor


In this article, we will be taking a look at 10 dividend stocks for the small-cap investor. To skip our detailed analysis of dividend investing, you can go directly to see the 5 Dividend Stocks for the Small-Cap Investor.

Small-cap stocks usually have market caps between $300 million to around $2 billion. These stocks offer a range of benefits to investors and have done so for decades, and we will be taking a look at some of these benefits below as well. And while stocks of renowned companies like PepsiCo, Inc. (NASDAQ: PEP), AT&T Inc. (NYSE: T), The Coca-Cola Company (NYSE: KO), and Chevron Corporation (NYSE: CVX) are also deemed notable investment options available today, the fact that small-cap stocks have managed to retain a degree of popularity among investor circles in 2021 makes it hard to ignore these investment vehicles anymore.

The first reason behind the popularity of these stocks among investors is their growth potential relative to large-cap stocks. These companies benefit from a larger room for growth, resulting in them often being able to outperform large-cap stocks. For instance, the Corporate Finance Institute has estimated that between 2000 and 2017, the S&P 600 and Russell 2000 Indices, both consisting of small-cap stocks, far outperformed the S&P 500 in terms of their returns. The Wall Street Journal has also mentioned that as of March 2021, small-cap stocks had been beating their large-cap counterparts. The year-to-date return for small-caps at the end of February was recorded to be 25% higher than the same for large-caps, for instance.

Investing has become difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETF by wide margins. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

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Photo by Artem Beliaikin on Unsplash

Without further ado, let’s take a look at the 10 dividend stocks for the small-cap investor.

Our Methodology

We have selected small-cap dividend stocks part of the Russell 2000 Index with dividend yields going up to 10%. Insider Monkey tracks the data of about 873 hedge funds, and we have also used this data to pick dividend stocks that are highly popular among hedge funds today. For each stock we have mentioned its yield and the number of hedge funds holding a stake in it, ranking them from the lowest to the highest dividend yield. Finally, we have used analysts’ ratings to determine which stocks are favorably placed in analyst and investor circles, picking stocks with mostly positive ratings and strong fundamentals.

Dividend Stocks for the Small-Cap Investor

10. Dime Community Bancshares, Inc. (NASDAQ: DCOM)

Number of Hedge Fund Holders: 12

Dividend Yield: 3%

Dime Community Bancshares, Inc. (NASDAQ: DCOM), a bank holding company, is based in Brooklyn, New York, and ranks 10th on our list of dividend stocks for the small-cap investor. The company was founded in 1864, and its subsidiaries include the Dime Community Bank and ESOP.

This May, Stephens upgraded shares of Dime Community Bancshares, Inc. (NASDAQ: DCOM) from Equal Weight to Overweight, alongside raising the price target on the stock from $35 to $38.50.

In the second quarter of 2021, Dime Community Bancshares, Inc. (NASDAQ: DCOM) had an EPS of $0.94. The company’s revenue was $122.8 million, up 136.4% year over year.

By the end of the second quarter of 2021, 12 hedge funds out of the 873 tracked by Insider Monkey held stakes in Dime Community Bancshares, Inc. (NASDAQ: DCOM) worth roughly $210 million. This is compared to 11 hedge funds in the previous quarter with a total stake value of approximately $186 million.

Like Pepsico, Inc. (NASDAQ: PEP), AT&T Inc. (NYSE: T), The Coca-Cola Company (NYSE: KO), and Chevron Corporation (NYSE: CVX), Dime Community Bancshares, Inc. (NASDAQ: DCOM) is a notable stock pick today.

9. Kite Realty Group Trust (NYSE: KRG)

Number of Hedge Fund Holders: 11

Dividend Yield: 3.4%

Kite Realty Group Trust (NYSE: KRG) is a full-service, vertically integrated real estate investment trust. The company offers convenient and beneficial shopping experiences and ranks 9th on our list of dividend stocks for the small-cap investor.

This September, Barclays began covering shares of Kite Realty Group Trust (NYSE: KRG) with an Overweight rating and a $27 price target.

In the second quarter of 2021, Kite Realty Group Trust (NYSE: KRG) had an FFO of $0.34, beating estimates by $0.02. The company’s revenue was $69.53 million, up 9.84% year over year and beating estimates by $2.28 million.

By the end of the second quarter of 2021, 11 hedge funds out of the 873 tracked by Insider Monkey held stakes in Kite Realty Group Trust (NYSE: KRG) worth roughly $34.5 million. This is compared to 11 hedge funds in the previous quarter with a total stake value of approximately $47 million.

Like Pepsico, Inc. (NASDAQ: PEP), AT&T Inc. (NYSE: T), The Coca-Cola Company (NYSE: KO), and Chevron Corporation (NYSE: CVX), Kite Realty Group Trust (NYSE: KRG) is a notable stock pick today.

Bireme Capital, an investment management firm, mentioned Kite Realty Group Trust (NYSE: KRG) in its fourth-quarter 2020 investor letter. Here’s what they said:

“Since March we have increasingly tilted the long book towards stocks whose businesses will improve as the pandemic fades, a strategy we first discussed in our 1Q20 letter. Now that 2020 is — thankfully — over, let’s take a look back at some of our predictions from Q1.

Kite Realty Group (KRG) is a Real Estate Investment Trust that owns grocery-anchored strip malls. In Q1, we said:

“Unfortunately, COVID-19 has severely impacted service businesses, including restaurants, most of whom have been forced to close or reduce capacity. As a result, KRG stock fell as much as 63%, from $19 to $7… At $7 per share, KRG traded for an 18% dividend yield and an implied 12.3% capitalization rate, rare numbers in the real estate world outside of failing properties. We do not think KRG is failing. We do not think this is the last time that people will work out in gyms, sit down at restaurants, get their nails done, or pick up their dry cleaning. It is our view that most of these businesses will survive and eventually pay rent again, although there will likely be a 6-12 month period of shared pain between tenants, employees, landlords, banks, and taxpayers… As consumers slowly return to service businesses, we think KRG will return to trading at much higher prices.”

8. Big 5 Sporting Goods Corporation (NASDAQ: BGFV)

Number of Hedge Fund Holders: 19

Dividend Yield: 3.6%

Big 5 Sporting Goods Corporation (NASDAQ: BGFV) is a sporting goods retailer operating in the Western US. The company offers a range of sports and fitness products like athletic shoes, apparel, and accessories, and ranks 8th on our list of dividend stocks for the small-cap investor.

This August, Lake Street reiterated a Buy rating on shares of Big 5 Sporting Goods Corporation (NASDAQ: BGFV), alongside raising the price target on the stock from $26 to $31.

In the second quarter of 2021, Big 5 Sporting Goods Corporation (NASDAQ: BGFV) had an EPS of $1.63, beating estimates by $0.55. The company’s revenue was $326.02 million, beating estimates by $34.37 million.

By the end of the second quarter of 2021, 19 hedge funds out of the 873 tracked by Insider Monkey held stakes in Big 5 Sporting Goods Corporation (NASDAQ: BGFV) worth roughly $43.2 million. This is compared to 14 hedge funds in the previous quarter with a total stake value of approximately $27 million.

7. CompX International Inc. (NYSE: CIX)

Number of Hedge Fund Holders: 4

Dividend Yield: 3.7%

CompX International Inc. (NYSE: CIX) is a manufacturer and seller of security products and recreational marine components in North America. The company ranks 7th on our list of dividend stocks for the small-cap investor and operates through its Security Products and Marine Components segments.

By the end of the second quarter of 2021, 4 hedge funds out of the 873 tracked by Insider Monkey held stakes in CompX International Inc. (NYSE: CIX) worth roughly $12 million. This is compared to 4 hedge funds in the previous quarter with a total stake value of approximately $12 million.

Like Pepsico, Inc. (NASDAQ: PEP), AT&T Inc. (NYSE: T), The Coca-Cola Company (NYSE: KO), and Chevron Corporation (NYSE: CVX), CompX International Inc. (NYSE: CIX) is a notable stock pick today.

6. Ethan Allen Interiors Inc. (NYSE: ETD)

Number of Hedge Fund Holders: 15

Dividend Yield: 4.2%

Ethan Allen Interiors Inc. (NYSE: ETD), an interior design company, manufactures and retails home furnishings in the US, Mexico, Honduras, and Canada. The company ranks 6th on our list of dividend stocks for the small-cap investor and operates through its Wholesale and Retail segments.

By the end of the second quarter of 2021, 15 hedge funds out of the 873 tracked by Insider Monkey held stakes in Ethan Allen Interiors Inc. (NYSE: ETD) worth roughly $46 million. This is compared to 13 hedge funds in the previous quarter with a total stake value of approximately $45 million.

Click to continue reading and see the 5 Dividend Stocks for the Small-Cap Investor.

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Disclosure: None. 10 Dividend Stocks for the Small-Cap Investor is originally published on Insider Monkey.



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Oliver Bolt

Oliver Bolt

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