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Back in July and September I highlighted dividend stocks with safe payouts and the potential for capital appreciation. This month, I'm highlighting three more dividend stocks, focusing on more speculative opportunities with which the average investor is likely unfamiliar.

Bear in mind that these companies are rather small, having a combined market capitalization under $1 billion. The size of these firms will likely provide for increased equity volatility relative to traditionally popular income stocks such as Procter & Gamble (NYSE:PG), Johnson & Johnson (NYSE:JNJ), or PepsiCo (NYSE:PEP).

In addition, the business models of these companies likely provide more risk than the stable "blue chips" traditionally touted for income investors. However, strong balance sheets and/or turnaround possibilities may provide for capital appreciation in addition to income generation. Long-term income-focused investors may find some unknown gems on this list, with the opportunity to increase yield and diversify portfolios.

1. Kimball International (NASDAQ:KBALB)
Closing Price 10/10: $5.10
Dividend (Yield): $0.20 (3.92%)
Market Cap: $192.3 million

Kimball operates in two segments: Its Electronics division (60% of FY 2011 sales) makes printed circuit boards for medical, automotive, and industrial uses, while its Furniture division (40% of sales) makes furniture for offices and hotels.

Kimball has paid quarterly dividends for 21 consecutive years. The dividend was held at 64 cents annually for over a decade before an early 2009 cut to the present 20 cent level, giving a current yield over 4%.

Kimball stock does have some risk: Free cash flow has been negative for the last two years, due to changes in working capital and expenses related to restructuring projects in U.S. and European facilities. Meanwhile, FY 2011 earnings (ending in June) were just 13 cents per share, giving a P/E near 40 and a payout ratio of 154%. The stock has struggled in response, hitting an all-time low of $4.61 in mid-September before a recent rebound.

However, a continued turnaround in the company's business could unlock the company's value. The higher-margin Furniture segment grew 16% in 2011, and continued growth should overcome the expiration of its contract with Bayer AG, Kimball's largest customer. Meanwhile, the company offers $1.87 per share in net cash, enough to pay for nine years of current dividends. And it trades at just over half of its tangible book value of $10 per share. Indeed, the company's cash and inventories alone, net of current liabilities, is greater than KBALB's current market capitalization. The company's history of dividend payouts, and strong balance sheet, should give income investors patience while awaiting the results of the company's streamlining and restructuring.

2. TheStreet Inc. (NASDAQ:TST)
Closing Price 10/10: $1.80
Dividend (Yield): $0.10 (5.56%)
Market Cap: $57.6 million

While the analysis on surely pales in comparison to the brilliance regularly found here on Seeking Alpha, its balance sheet and high dividend yield make it an interesting speculative choice. Adding in long-term security investments, and subtracting long-term liabilities (including deferred income taxes), TheStreet offers $2.28 per share, with a tangible book value of $2.14 (the difference due largely to deferred revenue). The 10-cent annual dividend, creating a yield well over 5%, has been paid consistently and without interruption since 2006.

The operating business of TheStreet, while miniscule, is starting to have some success. Revenues are near a three-year high, and audience size is up 33% year-over-year, while free cash flow in the first six months was $1 million. Given the $11 million cushion between the net value of its assets, and its market capitalization, further positive -- or even breakeven -- cash flow should bode well for investors.

The big issue facing TheStreet is its preferred stock, issued to Technology Crossover Ventures (TCV) in 2007. The stock is convertible at $14.26 per share, making conversion highly unlikely in the near future (if ever). However, TCV was allotted veto power over dividend increases and share buybacks, meaning TheStreet has little ability to return its existing cash to shareholders, beyond the current 5.5% dividend. Said CEO Darryl Otte on the company's most recent conference call:

I think that if you look at the terms of the preferred shares, which TCV holds 100% of, that one of the -- they have relatively few rights with respect to that. But one of them that they do have is we are required to seek their approval prior to raising the dividend. And I wouldn't expect that they would be interested in giving that approval. So share buybacks and dividend increases are not part of the arsenal [of] tools we have. [emphasis mine]

TheStreet seems to have few options in the way of resetting the deal. A buyout of the fund's initial $55 million investment would deplete the company's cash balance. Even a 50% discount (which would be most likely rejected, in any case) would represent an outlay of about 85 cents per share, harming common stock shareholders. TCV receives dividend payments based on the potential shares received upon conversion (about 3.5 million), so its incentive to make a deal at current prices seems limited, at best.

But even without dividend growth, TST's 5.5% yield looks enticing. The substantial cash balance should keep the dividend intact, and the discount to net assets looks overwrought given the company's moderate operating success. Any resolution in the preferred stock overhang could benefit the stock price, and continued growth on the top line could result in positive cash flow. As with KBALB, investors have downside cushion in the company's assets, while the company's cash balance should protect a strong dividend payout.

3. United Online (NASDAQ:UNTD)
Closing Price 10/10: $5.52
Dividend (Yield): $0.40 (7.25%)
Market Cap: $489.6 million

United Online owns online florists FTD and Interflora, along with websites Memory Lane (formerly and MyPoints, while also providing Internet access through the NetZero and Juno brands.

The company has paid a dividend since 2005, with the 10-cent payout held since a 50% cut in mid-2008. The current payout ratio of 68%, based on trailing earnings of 59 cents per share, is a little bit high. But this should moderate going forward. Analysts have consensus earnings targets of 93 and 82 cents per share for 2011 and 2012, respectively.

On a cash flow basis, however, the current 7.5% yield looks easily sustainable. Free cash flow has been over $100 million for each of the last four years, easily covering the $37 million in dividend payments. Cash flow slowed to $35 million for the first six months. But this should increase in the second half as earnings are forecast to double in the second half and working capital adjustments should be reversed.

Going forward, the company will have to grow its online brands to compensate for the eventual extinction of the cash-producing NetZero and Juno dial-up operations. Revenues fell 23%, and adjusted earnings 20%, in that segment for the second quarter (on a year-over-year basis), with segment earnings now accounting for roughly 35% of the company's total profit. The company's history of cash flow should give investors confidence in management's ability to do so. At Monday's close of $5.52, the company's market capitalization is $490 million. From 2007-2010, the company generated $495 million in free cash flow, with impressive consistency. Even with the slow drain of cash flow created by the legacy dial-up assets, United looks undervalued, and its dividend safe.

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

Source: 3 Dividend Stocks You've Likely Never Heard Of