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Payback periods were calculated for large cap stocks and mid cap stocks in prior articles and are calculated here for small cap stocks with dividend yields exceeding 4%. Payback period estimates depend on earnings growth and dividend payout ratios. Changes to the dividend yield were projected by taking the minimum of the following:

  • Earnings growth over the past five years
  • Analyst estimates for earnings growth for the next five years
  • Return on equity times the earnings reinvestment rate

The minimum of these measures was then used to estimate dividend growth for the next three years. Abnormal growth will not last forever, and analyst estimates- as informed as they are- are not predictive indefinitely. To address this limitation, a terminal 3% dividend growth rate was applied for every stock in the list after three years of projected growth rates. (Predicting economic growth many years out is impossible, and 3% seems like a reasonable value.)

Payback Periods for Small Cap, High Dividend Stocks

Ticker

Industry

Country

Div Yield

Payout Ratio

EPS growth past 5 years

EPS growth next 5 years

ROE x Re-

invstmnt.

ROE

Pay-

back Period (Yrs)

KFN

Asset

Management

USA

8.8%

19.4%

64.5%

19.0%

23.6%

5

PTNR

Wireless

Comms.

Israel

17.6%

75.3%

29.7%

3.8%

45.0%

181.9%

5

APSA

Property Management

Argentina

7.4%

25.5%

36.2%

20.0%

26.8%

6

BGCP

Investment Brokerage - National

USA

10.4%

248.2%

56.2%

12.5%

-11.8%

7.9%

6

BMA

Foreign

Regional

Banks

Argentina

10.2%

0.1%

13.7%

13.4%

27.2%

27.3%

6

AIXG

Diversified Machinery

Germany

5.1%

29.1%

98.3%

65.0%

26.9%

37.9%

7

BFR

Foreign

Regional

Banks

Argentina

18.1%

65.5%

-13.2%

4.2%

14.1%

40.7%

7

CTCM

Broadcasting -

TV

Russia

7.8%

74.6%

20.3%

34.8%

5.2%

20.3%

7

NKA

Gas Utilities

USA

12.8%

67.2%

0.0%

0.0%

2.2%

6.8%

7

NMM

Shipping

Greece

11.3%

130.1%

24.0%

2.3%

-3.8%

12.7%

7

PNNT

Asset

Management

USA

10.2%

90.3%

13.6%

7.0%

1.1%

11.3%

7

TCAP

Asset

Management

USA

10.4%

65.8%

33.7%

10.0%

7.2%

21.1%

7

CLMT

Oil & Gas

Refining & Marketing

USA

10.7%

259.4%

-0.2%

11.5%

-11.4%

7.2%

8

MAIN

Diversified Investments

USA

9.0%

62.1%

23.5%

7.0%

7.2%

18.9%

8

MSB

Diversified Investments

USA

8.7%

97.1%

9.4%

16.6%

572.0%

8

MVO

Oil & Gas

Drilling & Exploration

USA

9.5%

100.0%

4.4%

7.0%

0.0%

97.8%

8

OXF

Industrial

Metals &

Minerals

USA

10.4%

0.0%

4.0%

-19.7%

-19.7%

8

PSEC

Asset

Management

USA

12.8%

89.8%

-5.5%

13.5%

1.3%

13.0%

8

PVD

Diversified Investments

Chile

10.7%

18.3%

33.2%

33.2%

8

SLRC

Diversified Investments

USA

10.9%

68.4%

0.0%

6.0%

5.0%

15.8%

8

VOC

Independent

Oil & Gas

USA

10.7%

0.0%

0.0%

8

AINV

Diversified Investments

USA

13.8%

82.6%

-13.5%

7.5%

2.5%

14.1%

9

CODI

Staffing & Outsourcing Services

USA

10.9%

-2.8%

11.3%

-6.9%

-6.9%

9

FGP

Oil & Gas

Refining & Marketing

USA

9.2%

18.0%

4.0%

-30.3%

-30.3%

9

FSC

Credit Services

USA

12.9%

111.6%

-10.3%

6.8%

-1.0%

8.8%

9

GLP

Basic Materials Wholesale

USA

9.7%

141.1%

0.0%

2.0%

-1.9%

4.7%

9

QRE

Independent

Oil & Gas

USA

9.3%

0.0%

4.9%

0.0%

9

SDT

Independent

Oil & Gas

USA

9.2%

0.0%

11.0%

0.0%

9

STON

Personal

Services

USA

8.2%

4.9%

13.0%

-7.3%

-7.3%

9

VLCCF

Shipping

Bermuda

11.5%

158.3%

-4.7%

5.0%

-5.8%

9.9%

9

VNR

Oil & Gas

Drilling & Exploration

USA

8.1%

24.1%

7.0%

-1.1%

-1.1%

9

WAC

Asset

Management

USA

7.9%

120.7%

9.1%

20.0%

-1.2%

5.6%

9

CNSL

Telecom Services - Domestic

USA

8.5%

150.0%

9.7%

1.5%

-24.4%

48.7%

10

ENP

Oil & Gas

Drilling & Exploration

USA

9.0%

8.1%

0.0%

-1.4%

-1.4%

10

NCMI

Marketing

Services

USA

6.6%

136.7%

13.7%

10.2%

0.0%

10

NTLS

Wireless Communications

USA

5.9%

109.3%

85.5%

15.5%

-2.2%

23.5%

10

NTRI

Consumer

Services

USA

6.2%

85.6%

13.0%

14.0%

3.3%

23.1%

10

SB

Shipping

Greece

8.9%

42.9%

0.0%

5.0%

20.5%

35.9%

10

SFL

Shipping

Bermuda

10.8%

86.6%

-5.9%

-1.8%

2.3%

16.8%

10

VGR

Cigarettes

USA

8.8%

170.8%

0.1%

11.0%

0.0%

10

CMLP

Oil & Gas

Drilling & Exploration

USA

6.6%

163.0%

73.7%

7.9%

-6.5%

10.3%

11

CTEL

Telecom

Services -

Foreign

Hong Kong

7.5%

83.5%

0.0%

19.0%

2.9%

17.8%

11

ECT

Oil & Gas

Drilling & Exploration

USA

7.6%

0.0%

0.0%

11

GEL

Oil & Gas Pipelines

USA

6.5%

323.1%

5.3%

6.5%

-11.1%

5.0%

11

PDLI

Biotechnology

USA

9.8%

101.9%

-9.4%

14.0%

0.0%

11

PNG

Gas Utilities

USA

8.0%

146.8%

0.0%

6.0%

-1.6%

3.5%

11

TAL

Rental &

Leasing

Services

USA

7.4%

55.1%

10.6%

11.8%

10.3%

23.0%

11

TLP

Oil & Gas Pipelines

USA

7.4%

118.7%

19.3%

3.0%

-2.0%

10.8%

11

UAN

Agricultural Chemicals

USA

7.7%

0.0%

0.0%

11

WPC

Real Estate Development

USA

5.7%

60.5%

11.4%

8.2%

20.8%

11

AB

Asset

Management

USA

10.7%

101.5%

-15.3%

8.2%

-0.1%

8.5%

12

CMRE

Shipping

Greece

8.7%

61.7%

-8.1%

9.5%

11.3%

29.5%

12

HEP

Oil & Gas Pipelines

USA

6.2%

4.5%

7.7%

0.0%

12

MCGC

Asset

Management

USA

14.7%

-23.9%

10.0%

-6.5%

-6.5%

12

NRT

Diversified Investments

USA

7.7%

99.7%

-1.6%

85.2%

31571.4%

12

NSH

Oil & Gas Pipelines

USA

6.1%

125.9%

29.0%

5.6%

0.0%

12

PAC

Air Services,

Other

Mexico

7.1%

0.0%

13.4%

-0.7%

5.2%

5.2%

12

PBT

Diversified Investments

USA

6.8%

100.0%

0.6%

10.0%

0.0%

6597.3%

12

PSE

Oil & Gas

Drilling & Exploration

USA

7.4%

130.1%

0.1%

6.2%

-10.2%

33.8%

12

TGP

Shipping

Bermuda

7.6%

239.8%

-1.9%

5.1%

-8.7%

6.2%

12

DPM

Oil & Gas Pipelines

USA

5.9%

1036.6%

26.8%

4.5%

-21.2%

2.3%

13

FLY

Rental &

Leasing

Services

Ireland

6.4%

71.6%

-0.8%

10.0%

1.8%

6.3%

13

NGL

Oil & Gas

Refining & Marketing

USA

6.2%

145.8%

0.0%

9.0%

0.0%

13

NM

Shipping

Greece

6.4%

30.9%

0.6%

16.0%

5.3%

7.7%

13

OSG

Shipping

USA

6.9%

10.8%

-2.5%

-8.8%

-8.8%

13

PVR

Industrial

Metals &

Minerals

USA

7.7%

137.8%

-7.4%

7.0%

-8.3%

22.1%

13

TEU

Shipping

Greece

6.1%

2.6%

49.0%

10.4%

10.4%

13

ASR

Air Services,

Other

Mexico

4.5%

48.4%

21.6%

8.5%

5.4%

10.5%

14

HTGC

Diversified Investments

USA

8.9%

159.8%

-14.7%

11.2%

-4.2%

7.0%

14

IRS

Real Estate Development

Argentina

4.2%

0.0%

16.4%

13.0%

10.6%

10.6%

14

SBR

Diversified Investments

USA

6.1%

103.3%

0.5%

-29.7%

905.6%

14

SGU

Oil & Gas Pipelines

USA

6.3%

55.9%

-2.4%

5.2%

11.8%

14

SPH

Gas Utilities

USA

7.1%

107.8%

10.1%

3.0%

-2.1%

26.8%

14

UNTD

Specialty

Retail, Other

USA

7.1%

70.6%

-4.7%

15.0%

3.4%

11.6%

14

APL

Oil & Gas Pipelines

USA

6.2%

18.4%

-5.1%

10.0%

16.9%

20.8%

15

BKCC

Asset

Management

USA

12.1%

114.4%

-24.0%

5.0%

-1.6%

11.1%

15

DCOM

Savings & Loans

USA

4.8%

43.2%

4.0%

7.5%

7.6%

13.3%

15

ELRC

Rental &

Leasing

Services

USA

4.9%

58.2%

2.8%

15.0%

4.8%

11.4%

15

FII

Asset

Management

USA

5.1%

64.2%

3.0%

7.5%

11.4%

31.7%

15

IDT

Diversified Communication Services

USA

6.9%

82.9%

19.9%

2.0%

11.9%

15

INN

Real Estate Development

USA

5.5%

0.0%

0.0%

15

ITRN

Electronics Wholesale

Israel

7.6%

0.0%

-9.9%

10.0%

11.5%

11.5%

15

MDP

Publishing - Periodicals

USA

5.7%

35.6%

0.0%

9.7%

11.0%

17.1%

15

MMLP

Independent

Oil & Gas

USA

9.0%

281.4%

-16.8%

3.0%

-3903.7%

2152.2%

15

OILT

Oil & Gas Pipelines

USA

5.3%

0.0%

7.1%

0.0%

15

OMAB

Air Services, Other

Mexico

4.9%

4.4%

3.3%

0.0%

15

SSW

Shipping

Hong Kong

5.8%

87.8%

-1.2%

20.7%

0.5%

3.9%

15

STRA

Education & Training Services

USA

4.4%

39.1%

24.4%

6.9%

57.2%

93.9%

15

TGH

Rental &

Leasing

Services

Bermuda

4.7%

36.5%

8.3%

12.0%

17.6%

27.7%

15

TLLP

Oil & Gas Pipelines

USA

5.3%

0.0%

6.7%

0.0%

15

UIL

Electric Utilities

USA

5.1%

92.2%

2.1%

4.0%

0.9%

11.3%

15

UVV

Tobacco

Products, Other

USA

4.5%

33.9%

10.2%

9.3%

14.1%

15

VIVO

Diagnostic Substances

USA

4.2%

121.4%

13.1%

17.3%

-4.0%

18.5%

15

ALE

Diversified

Utilities

USA

4.6%

73.1%

27.9%

6.0%

2.4%

8.8%

16

BBEP

Oil & Gas

Drilling & Exploration

USA

9.4%

-19.2%

6.0%

-8.9%

-8.9%

16

BGS

Processed & Packaged Goods

USA

4.3%

73.2%

18.2%

10.0%

6.1%

22.8%

16

BKH

Electric

Utilities

USA

4.4%

71.7%

12.4%

6.0%

2.1%

7.4%

16

DMLP

Diversified Investments

USA

6.7%

147.1%

-9.5%

-10.9%

23.0%

16

LDR

Scientific & Technical Instruments

USA

4.4%

88.6%

5.8%

12.0%

3.3%

29.2%

16

PLOW

Auto Parts

USA

5.2%

155.4%

0.0%

9.0%

-5.4%

9.7%

16

PRK

Regional -

Midwest Banks

USA

6.5%

86.6%

-7.4%

7.1%

1.4%

10.1%

16

SBGI

Broadcasting - TV

USA

4.8%

65.8%

7.9%

3.0%

0.0%

16

UNS

Electric

Utilities

USA

4.6%

55.4%

14.4%

7.5%

5.9%

13.3%

16

AVA

Diversified

Utilities

USA

4.4%

58.5%

12.5%

4.7%

3.8%

9.1%

17

BRKL

Savings &

Loans

USA

4.3%

72.0%

4.8%

6.0%

1.6%

5.6%

17

FRO

Shipping

Bermuda

10.0%

-23.6%

0.0%

-2.5%

-2.5%

17

HGT

Oil & Gas

Drilling & Exploration

USA

6.2%

100.0%

-10.0%

0.0%

42.9%

17

IMKTA

Grocery Stores

USA

4.3%

42.3%

3.4%

13.3%

5.1%

8.8%

17

LGCY

Oil & Gas

Drilling & Exploration

USA

7.4%

-15.3%

8.3%

-9.0%

-9.0%

17

OB

Surety & Title Insurance

USA

5.7%

28.4%

-7.7%

5.0%

4.2%

5.9%

17

POR

Electric

Utilities

USA

4.2%

47.3%

10.2%

5.5%

5.4%

10.3%

17

XTEX

Independent

Oil & Gas

USA

8.2%

-16.9%

7.5%

-2.1%

-2.1%

17

ALSK

Telecom

Services - Domestic

USA

11.2%

-28.2%

31.9%

0.0%

18

CTBI

Regional - Southeast

Banks

USA

4.4%

49.4%

-1.0%

10.0%

5.5%

10.9%

18

FFIC

Savings &

Loans

USA

4.3%

45.6%

-0.5%

7.0%

4.8%

8.8%

18

MIM

Property Management

Canada

6.2%

10.6%

-3.1%

-3.1%

18

RNST

Regional - Southeast

Banks

USA

4.6%

-2.2%

8.5%

0.0%

18

WWE

Entertainment - Diversified

USA

4.5%

158.9%

-1.3%

8.6%

-8.3%

14.0%

18

BOH

Regional -

Pacific Banks

USA

4.2%

53.8%

2.2%

7.8%

7.2%

15.7%

19

EBF

Office Supplies

USA

4.1%

39.6%

1.8%

13.0%

7.1%

11.7%

19

EROC

Oil & Gas

Refining & Marketing

USA

7.9%

-20.2%

20.0%

-6.5%

-6.5%

19

NWE

Diversified

Utilities

USA

4.2%

63.5%

4.6%

6.5%

3.6%

9.8%

19

QUAD

Business

Services

USA

4.2%

0.0%

-19.7%

-19.7%

19

UBSI

Regional - Mid-Atlantic

Banks

USA

5.0%

72.8%

-6.7%

7.9%

2.3%

8.5%

19

USMO

Wireless Comms.

USA

7.1%

20.0%

49.0%

43.0%

53.8%

19

AYR

Rental &

Leasing

Services

USA

4.0%

35.4%

-2.6%

8.0%

4.6%

7.1%

20

CHCO

Regional - Mid-Atlantic

Banks

USA

4.2%

50.8%

-2.7%

8.0%

6.4%

13.0%

20

DLX

Business

Services

USA

4.2%

36.9%

-0.8%

6.3%

36.1%

57.3%

20

LG

Gas Utilities

USA

4.1%

6.0%

5.0%

0.0%

20

SJT

Diversified Investments

USA

5.6%

100.0%

-12.4%

0.0%

441.4%

20

TRMK

Regional - Southeast

Banks

USA

4.1%

54.7%

-2.8%

8.3%

4.1%

9.1%

20

AF

Savings &

Loans

USA

6.7%

65.9%

-19.1%

4.7%

2.1%

6.1%

21

BLX

Foreign

Money

Center Banks

Panama

5.0%

-10.5%

6.0%

10.4%

10.4%

21

BWINB

Property & Casualty

Insurance

USA

4.4%

-6.0%

8.0%

-0.3%

-0.3%

21

FMER

Regional -

Midwest Banks

USA

4.6%

60.1%

-7.9%

7.2%

3.0%

7.5%

21

FNB

Regional - Southeast Banks

USA

4.5%

67.7%

-7.7%

5.5%

2.5%

7.6%

21

GHL

Investment Brokerage - Regional

USA

4.7%

-9.1%

17.0%

0.0%

21

SAFT

Property & Casualty

Insurance

USA

4.7%

97.6%

-8.9%

15.0%

0.1%

4.4%

21

NAT

Shipping

Bermuda

7.8%

-24.7%

0.0%

-3.5%

-3.5%

22

TRST

Regional - Northeast

Banks

USA

5.2%

68.3%

-13.4%

3.3%

10.4%

22

ANAT

Property & Casualty

Insurance

USA

4.3%

50.2%

-9.3%

2.3%

4.6%

23

GBCI

Regional -

Pacific Banks

USA

4.3%

294.1%

-11.1%

9.3%

-2.9%

1.5%

24

SVU

Grocery Stores

USA

4.5%

206.1%

-13.1%

6.1%

-1.9%

1.8%

24

GFIG

Investment Brokerage - National

USA

4.4%

-14.0%

20.0%

0.0%

25

OLN

Specialty Chemicals

USA

4.1%

28.4%

-13.2%

13.3%

17.3%

24.1%

26

ATLS

Gas Utilities

USA

4.1%

57.2%

-17.0%

49.5%

2.5%

5.9%

28

CHFC

Regional -

Midwest Banks

USA

4.0%

69.7%

-16.0%

4.0%

2.1%

6.9%

28

TK

Shipping

Canada

4.8%

-23.0%

-0.5%

-12.1%

-12.1%

29

TOO

Shipping

Bermuda

7.4%

195.5%

-32.9%

7.8%

-14.7%

15.4%

29

EXLP

Oil & Gas Equipment & Services

USA

8.0%

-39.9%

4.8%

-8.0%

-8.0%

30+

ISIL

Semiconductor - Broad Line

USA

4.1%

87.0%

-18.7%

14.0%

0.9%

6.6%

30+

MDC

Residential Construction

USA

5.5%

-53.0%

10.0%

-9.0%

-9.0%

30+

NDZ

Specialized

Health Services

Canada

4.5%

0.0%

-1.7%

8.0%

14.5%

14.5%

30+

OTTR

Diversified Utilities

USA

6.0%

194.4%

-30.2%

5.0%

-3.3%

3.5%

30+

STFC

Property & Casualty

Insurance

USA

4.7%

-27.4%

11.3%

-20.3%

-20.3%

30+

The payback period answers the following question “How long would it take for a dividend-paying stock to pay back the stock’s original price?” The time it takes for an investment’s cash outflows to sum to the original outlay is called the payback period, and it is considered a simplistic and crude measure of risk.

These rough estimates illustrates how long you might have to wait to get paid back. If you consider payback calculations useful, these calculations should help you realize how long you will have to wait.

The payback period is widely hated by financial professionals but is a simple metric laypeople instinctively use when evaluating an investment. Notice that the payback period fails to account for how dividend distributions in earlier years are worth more than the same dollar value paid out later in the future. You would be able to reinvest the earlier distribution and earn a return on it, making it worth more. Even worse, it ignores whatever price you would reap upon reselling the stock.

If you hate this metric, estimates of the payback period to show that—even for stocks with dividend yields above 4%–investors will often have to wait a long time to get paid back. These results should encourage laypeople to consider other investment evaluation methods. It seems that investors can’t live on dividends alone.

Disclaimer: This article was written to provide investor information and education, and should not be construed as investment advice. I have no idea what your individual risk, time-horizon, and tax circumstances are: please seek the personal advice of a financial planner. This article uses third-party data and may contain approximations and errors. Please check estimates and data for yourself before investing.

Source: Small Cap, High Dividend Stocks: Waiting For Payback