Growing Dividends From 6 Small Cap Stocks

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 |  Includes: ACO, AZZ, CMC, HNI, HSC, THO
by: Dividend Dog

Dividends don't just come from large cap stocks. On the contrary, there are many attractive dividend paying stocks with market capitalizaitons under $2.0 billion.

The following small cap dividend paying stocks were screened for their long term performance. Each of the following companies pays a dividend yield greater than or equal to 2.0%, which is higher than the 10-year treasury yield and the yield of large caps in the S&P 500. Even better, these small cap stocks have increased dividend payments over 5% (annual average) over the past 10 years. Thus, each of these small caps pays more than treasuries and has a long-term trend of dividend growth, which is better than the static interest payments on fixed-rate treasuries.

Price multiples, dividend histories, and return on equity hisoties are provided below:

Thor Industries Inc. (NYSE:THO) recently traded at $30.59 per share. At this price level, the stock has a 2.0% dividend yield. For 10 out of the past 10 fiscal years, a share of THO paid a total of $2.02 in dividends. Of these dividend payments, a total of $1.52 were paid in the last five years.

THO shareholders have enjoyed a 11.5% rise in share price over the past year. At present, shares of this small cap stock trade at a price-to-book ratio of 2.0, a price-to-earnings multiple of 16.3, and a price-to-sales multiple of 0.6 (trailing twelve months). Over the past decade shareholders savored a 17.3% average annual return on equity.

Harsco Corporation (NYSE:HSC) recently traded at $22.79 per share. At this price level, the stock has a 3.6% dividend yield. For 10 out of the past 10 fiscal years, a share of HSC paid a total of $6.42 in dividends. Of these dividend payments, a total of $3.76 were paid in the last five years.

HSC shareholders have enjoyed a 11.9% appreciation in share price over the past year. At present, shares of this small cap stock trade at a price-to-book ratio of 1.3, a price-to-earnings multiple of 58.4, and a price-to-sales multiple of 0.6 (trailing twelve months). Over the past decade shareholders savored a 13.2% average annual return on equity.

HNI Corp. (NYSE:HNI) recently traded at $27.52 per share. At this price level, the stock has a 3.3% dividend yield. For 10 out of the past 10 fiscal years, a share of HNI paid a total of $6.76 in dividends. Of these dividend payments, a total of $4.08 were paid in the last five years.

HNI shareholders have seen a 5.4% change in share price over the past year. Shares of this small cap stock currently trade at a price-to-book ratio of 3.0, a price-to-earnings multiple of 31.3, and a price-to-sales multiple of 0.7 (trailing twelve months). Over the past decade shareholders savored a 14.0% average annual return on equity.

Commercial Metals Company (NYSE:CMC) recently traded at $14.18 per share. At this price level, the stock has a 3.4% dividend yield. For 10 out of the past 10 fiscal years, a share of CMC paid a total of $2.75 in dividends. Of these dividend payments, a total of $2.22 were paid in the last five years.

CMC shareholders have seen a 3.5% change in share price over the past year. Shares of this small cap stock presently trade at a price-to-book ratio of 1.4 and a price-to-sales multiple of 0.2 (trailing twelve months). (A net loss over the past year makes a PE ratio meaningless.) Over the past decade shareholders savored a 10.8% average annual return on equity.

AZZ Incorporated (NYSE:AZZ) recently traded at $48.26 per share. At this price level, the stock has a 2.1% dividend yield. For 3 out of the past 10 fiscal years, a share of AZZ paid a total of $1.33 in dividends. Of these dividend payments, a total of $1.25 were paid in the last five years.

AZZ shareholders have seen a 6.2% change in share price over the past year. Shares of this small cap stock currently trade at a price-to-book ratio of 2.2, a price-to-earnings multiple of 15.9, and a price-to-sales multiple of 1.4 (trailing twelve months). Over the past decade shareholders savored a 15.0% average annual return on equity.

Amcol International Corp. (NYSE:ACO) recently traded at $28.99 per share. At this price level, the stock has a 2.5% dividend yield. For 10 out of the past 10 fiscal years, a share of ACO paid a total of $4.23 in dividends. Of these dividend payments, a total of $3.21 were paid in the last five years.

ACO shareholders have seen a 8.0% growth in share price over the past year. At present, shares of this small cap stock trade at a price-to-book ratio of 2.3, a price-to-earnings multiple of 25.7, and a price-to-sales multiple of 1.0 (trailing twelve months). Over the past decade shareholders savored a 12.9% average annual return on equity.

Unfortunately these dividend-paying small caps are trading at high valuations. Income investors should monitor these firms and wait for cheaper valuations before seriously considering them as additions to their income portfolios.

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

Disclaimer: This article was written to provide investor information and education, and should not be construed as a guarantee or 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. Moreover, this research does NOT constitute a guarantee.