Dividend Champions Smackdown IX Follow-up: Micro-Caps

by: David Fish

A few days ago, I screened the Dividend Champions list of companies that have paid higher dividends for at least 25 straight years (which can be found here), using market capitalization as a primary focus. The result was a diverse selection of Small Cap and Mid Cap companies in each category - Champions, Contenders, and Challengers – that are worthy of further study.

(Small Caps are generally described as having a market capitalization (stock price times shares outstanding) between $100 million and $2 billion, whereas Mid Caps range in size from $2 billion to $10 billion in market capitalization.) But that left the question of whether there are any decent “Micro-cap” (under $100 million) companies with dividend streaks. So I decided to screen as follows:

Step 1: Sort the companies by market cap (column AC), from low to high. Unlike most Smackdowns, I decided to combine the Champions, Contenders, and Challengers. This produced a group of 20 micro-caps and once I eliminated four that had not increased their dividend in more than a year, there were 16.

Step 2: Sort those companies by yield. In Smackdown IX, I had eliminated yields below 2%, but all 16 companies qualified in this case.

Step 3: Sort those companies by latest percentage increase, high to low. Like Step 2, all 16 micro-caps moved on to the next step.

Step 4: Compare the remaining companies by the percentage increase of Next Year's EPS estimate over This Year's EPS estimate. This is where the sparsity of data (on micro-caps) fails. Only two companies had EPS estimates, so I did not eliminate any candidates here.

Step 5: Compare the candidates by their 1-, 3-, 5-, and 10-year Dividend Growth Rates (columns AJ to AM). I eliminated any company that had a DGR of less than 3% in any of these periods. (I did not eliminate companies with “n/a” because of shorter histories.) The list of remaining candidates follows:

(Note that I've sorted all tables back into alphabetical order)

Click to enlarge:


Exactly half of the 12 companies come from the banking industry, but all of these companies have attractive properties, such as strong dividend growth, high yield, or low stock price, so they are worthy of further study for possible purchase. Clearly, there are some good micro-cap candidates to consider, subject to the caveat that there may be less information (such as earnings estimates) available than there may be for larger companies. As always, please consider this no more than a starting point for more in-depth research.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.