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Arie Goren, Portfolio123 (470 clicks)
Long only, value, research analyst, dividend investing
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About a half of the small-cap companies that are included in the S&P SmallCap 600 index pay dividends. As a matter of fact, 283 of these companies pay dividends. The chart below presents the current annual dividend yield distribution among the S&P SmallCap companies.

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Data: Zacks

While there is no official breakdown, the division between the large, medium and small cap is approximately as follows:

Large-cap: $10 billion and greater

Mid-cap: $1 billion-$10 billion

Small-cap: $100 million-$1 billion

S&P SmallCap 600

Description from Standard & Poor's:

The S&P SmallCap 600 covers approximately 3% of the domestic equities market. Measuring the small cap segment of the market that is typically renowned for poor trading liquidity and financial instability, the index is designed to be an efficient portfolio of companies that meet specific inclusion criteria to ensure that they are investable and financially viable.

In my previous post, I tried to determine if the five stocks that have the highest dividend yield among the small-cap stocks included in the S&P SmallCap 600 index are a bargain now. In this article, I try to determine if the five S&P 600 second-best dividend yielders are currently a bargain.

In this article, I will give the corresponding fundamental parameters for these five companies and my own opinion about them. Nonetheless, these data and my opinion should only serve as a basis for further research. All the data for this article were taken from Yahoo Finance and finviz.com on January 18 before the market open.

The table and the chart below present the top five second-highest dividend yielders, their forward annual dividend rate, the forward yield, the payout ratio and the dividend rate of growth for the past five years.

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Inland Real Estate Corp. (IRC)

Inland Real Estate Corporation, a real estate investment trust (REIT), engages in the ownership, operation, and development of shopping centers and single-tenant retail properties in the Midwest region of the United States.

Inland Real Estate has a high debt (total debt to equity is 1.83), and the price to book value ratio is at 1.89. The forward annual dividend yield is very high at 6.51%, and the payout ratio is very high at 2,650%. The annual rate of dividend growth over the past five years was negative at -10.2%.

IRC has a total cash per share of $0.12 and it is expected to post a profit of $0.86 a share in the current year and $0.92 in 2013, which should be enough to sustain dividend payments of $0.57.

The IRC stock is trading 2.69% above its 20-day simple moving average, 6.75% above its 50-day simple moving average and 7.21% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

Most analysts rate the IRC stock as a hold, and I think this rating is the most appropriate.

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Data: Yahoo Finance

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Chart: finviz.com

United Online, Inc. (UNTD)

United Online, Inc., through its subsidiaries, provides consumer products and services over the Internet in the United States, Europe, and internationally.

United Online has a low debt (total debt to equity is 0.50), and it has a trailing P/E of 15.20 and a forward P/E of 22.25. The PEG ratio is quite low at 1.01, and the price-to-sales ratio is very low at 0.65. The forward annual dividend yield is very high at 6.42%, and the annual rate of dividend growth over the past five years was negative at -12.9%. The payout ratio is at 97.6%.

UNTD has a total cash per share of $1.19 and it is expected to post a profit of $0.66 a share in the current year and $0.62 in the next year, which should be enough to sustain dividend payments of $0.40.

The UNTD stock is trading 6.59% above its 20-day simple moving average, 10.94% above its 50-day simple moving average and 29.03% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

Analysts recommend the stock. Among the three analysts covering the stock, one rates it as a strong buy and two rate it as a buy.

The very rich dividend, the fact that the stock is in an uptrend and the analysts' recommendations are all factors that make UNTD stock quite attractive.

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Data: Yahoo Finance

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Chart: finviz.com

Medical Properties Trust Inc. (MPW)

Medical Properties Trust, Inc. operates as a real estate investment trust (REIT) in the United States.

Medical Properties has a forward P/E of 15.94, and the average annual earnings growth estimates for the next five years is at 10.33%. The forward annual dividend yield is very high at 6.20%, and the payout ratio is very high at 181.8%. The annual rate of dividend growth over the past five years was negative at -5.9%.

MPW has a total cash per share of $0.27 and it is expected to post a profit of $0.90 a share in the current year and $1.07 in 2013, which should be enough to sustain dividend payments of $0.80.

The MPW stock is trading 5.55% above its 20-day simple moving average, 9.44% above its 50-day simple moving average and 28.62% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

MPW will report its latest quarterly financial results on January 30. MPW is expected to post a profit of $0.25 a share, a 31.6% rise from the company's actual earnings for the same quarter a year ago. The reported results will probably affect the stock price in the short term.

The very rich dividend and the fact that the stock is in an uptrend are all factors that make MPW stock quite attractive.

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Data: Yahoo Finance

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Chart: finviz.com

Lumos Networks Corp. (LMOS)

Lumos Networks Corp. provides fiber-based network services in the Mid-Atlantic region. It operates in two segments, Competitive and Rural Local Exchange Carrier.

Lumos Networks has a very low forward P/E of 10.21, and the price-to-sales ratio is also very low at 0.95. The forward annual dividend yield is quite high at 6.16%.

LMOS is expected to post a profit of $0.90 a share in the current year and $0.89 in the next year, which should be enough to sustain dividend payments of $0.56.

LMOS stock is trading 44.38% below its 52-week high, and has 26.5% upside potential based on the consensus mean target price of $11.50.

Analysts recommend the stock. Among the three analysts covering the stock, one rates it as a strong buy, one rates it as a buy and one rates it as a hold.

The cheap valuation, the rich dividend, the analysts' recommendation and the 26.5% upside potential based on the consensus mean target price of $11.50 are all factors that make LMOS stock quite attractive.

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Data: Yahoo Finance

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Chart: finviz.com

Franklin Street Properties Corp. (FSP)

Franklin Street Properties Corp. provides real estate and investment banking/investment services in the United States.

Franklin Street Properties has a low debt (total debt to equity is 0.55), and it has a trailing P/E of 47.93. The forward annual dividend yield is quite high at 5.87%, and the payout ratio is very high at 281.5%. The annual rate of dividend growth over the past five years was negative at -9.3%.

FSP has a total cash per share of $0.29 and it is expected to post a profit of $0.95 a share in the current year and $1.03 in 2013, which should be enough to sustain dividend payments of $0.76.

The FSP stock is trading 3.05% above its 20-day simple moving average, 9.02% above its 50-day simple moving average and 20.61% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

Most analysts rate the FSP stock as a hold, and I think this rating is the most appropriate.

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Data: Yahoo Finance

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Chart: finviz.com

Source: 5 Small-Cap Second-Best Dividend Yielders, Are They Bargain Stocks Now?