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Small cap stocks have a market capitalization ranging from $300 million to $2 Billion. Some smaller companies pay surprisingly higher dividends, sometimes as high as bigger companies or even more. One of the reasons is that the smaller companies can generate strong capital growth which leads to higher profit margin and an ease of declaring dividends. The company’s size may provide an indication of the relative risk of its business model, and small caps are valued generally at a lower p/e ratio, which boosts the dividend yield because they are riskier than their larger counterparts. Here are a couple of stocks which are high on the dividend radar:
Dicker Data Limited (ASX:DDR), is one small cap dividend stocks which has maintained revenue growth across all business sectors and geographies. Accounting for an incremental $86m in revenue, a total of 18 new vendors were added during FY17, and revenue increased by 10.2% just ahead of guidance. What resulted in further increase in improvements in the company’s balance sheet leverage is that the company continued to reduce it’s working capital and debt requirements. The total dividend paid during the year FY17 was $26.3m or 16.4cps, an increase of 5.5% on FY16. This reflected a lift of 5.3% on a dividend per share basis.
The annual dividend yield for the stock is 5.73% which is fully franked, and the most recent dividend declared was of 4.400c with ex-dividend date as of May 17, 2018 and dividend pay date as June 01, 2018. The stock of the company traded at a market price of $3.04 on July 17, 2018, market open, and has seen a daily price change or a rise of $0.035 or a percentage change of 1.167% a day before. As the product mix and market competition saw the profit margins decrease slightly, gross profit increased by 7.4%. Net profit after tax increased by 5.1% which includes tax expense that was under objection with the ATO. For the whole group, profit before tax increased by 22.8% over the 2017 Q1 result, and net profit after tax increased by 26.1%. The group is expanding its distribution network and was lately appointed as Kyocera distributer. The group has now renegotiated debt facility for 3 years and projected for FY18 revenue of $ 1.39 billion.
Another one of the small cap dividend stocks is Contango Income Generator Limited (ASX:CIE), which recently advised that the company intends to reweight CIE’s investment portfolio to full investment. Over the past 12-18 months, it has carried a cash weighting of approximately 15%. The board believes the investment portfolio will be more attractive to potential investors and revisions will be made to the proportion of invested assets to a target of around 95% of net tangible assets. Underpinning the portfolio holding there will be no change to the investment strategy. Because of the company’s overall increased equity position, in addition to the cash coverage of CIE’s dividends, the level of franking on these dividends is expected to increase over time. Mr. Andrew MacDonald, Chairman, said, “the Board views this re-weighting by the Company as a positive and in line with its shareholders’ investment objectives.
CIE stock traded at a market price of $0.910, as at July 17, 2018 post market open. The annual dividend yield of the stock is 9.07% which is franked 50%. The most recent dividend declared was of 1.6c for which the ex-dividend date was June 08, 2018 and dividend pay date was June 26, 2018. While CIE looks to be a punt with risks being given due weightage, exposure to DDR can be continued given projections supported by performance and decent returns.
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The Income available from dividends remains attractive for many investors.
We take a look at the best yields on the market and assess what they say about a company’s prospect.
One Thing is certain, though, Australia interest rates are still low, making income difficult to come by and keeping the focus for many investors on high yielding stocks. Kalkine’s team of analysts bought you handpicked report for “Top 25 Dividend Stocks For 2018.”
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The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.
