Dividend investors are typically well aware of the mega-cap dividend paying stocks such as Johnson & Johnson (JNJ) and Procter & Gamble (PG). They are also generally well aware of large dividends in sectors such as Energy Master Limited Partnerships (MLPs) and global shipping companies.
While opportunities abound in the above-mentioned well-covered areas, there are a number of small and mid-capitalization companies in a wide array of industries that have received far less attention, but offer lucrative opportunities for yield. Three of these firms are brought to the attention of investors below:
US Ecology (ECOL): Lacking solutions to the problem of nuclear waste is a long-term economic issue that will be a concern for the long term, regardless of changes in the U.S. economy. This company is in the waste management business, but it doesn't compete with the largest firm (Waste Management: WM) in that space, because it is a niche player, dealing in the cleanup of hazardous sites by disposing of high level radioactive waste. The barriers to entry in the hazardous waste storage and cleanup industry are exceptionally high due to the limited number of licenses given by the federal government.
US Ecology has a market capitalization of $322 million, has grown revenues significantly through the past five years, and pays a generous dividend, recently yielding 3.9%. US Ecology has maintained stable quarterly dividend payments dating back to Q2 2005.
Psychemedics (PMD): Psychemedics provides laboratory testing based on hair follicle samples for employers. This is a lucrative niche in the employee testing space, and PMD has sustained a long expansion of its business with a sustained dividend payout to match.
PMD has paid out quarterly dividends without interruption since Q1 1997, and the company's securing new patents that will expand the capabilities of its testing systems will likely allow it to grow and continue to expand dividends into the future. PMD has a market capitalization of just $54 million, trades at a P/E ratio of 15 and offers a .60 annual dividend, producing a yield of 6.0% at the current price of $9.92.
One Beacon Insurance (OB): One Beacon, which operates specialty insurance lines focused on maritime and business insurance, was a spin-off from parent company White Mountains Insurance (WMI) in 2006. Since that time, the company has returned significant capital to shareholders in the form of quarterly and special dividends.
One Beacon has a market capitalization of $393 million. The regular quarterly dividend has grown to .84 annually, while three special dividends in 2008, 2010, and 2011 that have returned an additional $5.53 per share to shareholders. The regular quarterly dividend generates a yield of 6.4% at the current share price of $12.85.