Dividend stocks at the small-cap level present an interesting investment opportunity. Here we find the greatest opportunity for growth, balanced with the typical concerns about risk. What makes dividend investments particularly attractive at this level is when they offer high yields. This means greater payouts for the investor, and as growth takes place, these payouts can continue on the upward trend. The small cap dividends on our list today are all high yielders that have demonstrated strong profitability over the past year. In addition, they have all been rated 'Buy' or 'Strong Buy' in recent months by industry analysts. We think you will find our list worthy of further review.
The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time this means that it's earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole.
We first looked for small cap stocks that have a high dividend yield (Div. Yield > 5%). We then screened for businesses that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). From here, we then looked for companies with strong profit margins (1-year operating margin>15%)(1-year fiscal EPS growth rate>10%). We did not screen out any sectors.
Do you think these small-cap stocks should be priced higher? Use our list along with your own analysis.
1) TAL International Group, Inc. (TAL)
|Industry:||Rental & Leasing Services|
TAL International Group, Inc. has a Dividend Yield of 6.87%, Payout Ratio of 62.55%, Analysts' Rating of 2.50, Operating Profit Margin of 56.29%, and Earnings Per Share Growth Rate of 77.90%. The short interest was 9.37% as of 08/15/2012. TAL International Group, Inc. engages in leasing intermodal containers and chassis worldwide. The company operates in two segments, Equipment Leasing and Equipment Trading. The Equipment Leasing segment is involved in the acquisition, leasing, re-leasing, and sale of intermodal transportation equipment, including dry freight containers, which are used for general cargo, such as manufactured component parts, consumer staples, electronics, and apparel; and refrigerated containers that are used for perishable items comprising fresh and frozen foods.
2) SeaCube Container Leasing Ltd. (BOX)
|Industry:||Rental & Leasing Services|
SeaCube Container Leasing Ltd. has a Dividend Yield of 6.27%, Payout Ratio of 47.22%, Analysts' Rating of 2.20, Operating Profit Margin of 22.88%, and Earnings Per Share Growth Rate of 11.70%. The short interest was 1.79% as of 08/15/2012. SeaCube Container Leasing Ltd. operates as a container leasing company worldwide. It principally engages in the acquisition, leasing, re-leasing, and subsequent sale of refrigerated and dry containers, and generator sets. The company's containers are used to ship products internationally and facilitate movement of goods via multiple transportation modes, including ships, rail, and trucks.
3) Apollo Residential Mortgage, Inc. (AMTG)
|Industry:||REIT - Residential|
Apollo Residential Mortgage, Inc. has a Dividend Yield of 14.95%, Payout Ratio of 56.72%, Analysts' Rating of 2.00, Operating Profit Margin of 65.19%, and Earnings Per Share Growth Rate of 550.00%. The short interest was 3.73% as of 08/15/2012. Apollo Residential Mortgage, Inc. operates as a residential real estate finance company that invests in residential mortgage assets in the United States. It offers agency and non-agency residential mortgage-backed securities. The company is based in New York, New York.
4) Triangle Capital Corporation (TCAP)
Triangle Capital Corporation has a Dividend Yield of 8.13%, Payout Ratio of 80.97%, Analysts' Rating of 2.10, Operating Profit Margin of 64.06%, and Earnings Per Share Growth Rate of 45.93%. The short interest was 4.49% as of 08/15/2012. Triangle Capital Corporation is a business development company specializing in private equity and venture capital investments. It focuses on leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market companies. The firm prefers to make investments in many business sectors including manufacturing, distribution, transportation, energy, communications, health services, restaurants, media, and others.
5) LRR Energy, L.P. (LRE)
|Industry:||Independent Oil & Gas|
LRR Energy, L.P. has a Dividend Yield of 11.38%, Payout Ratio of 27.14%, Analysts' Rating of 2.30, Operating Profit Margin of 33.89%, and Earnings Per Share Growth Rate of 113.92%. The short interest was 1.86% as of 08/15/2012. LRR Energy, L.P., through its subsidiary, LRE Operating, LLC, engages in the acquisition, exploitation, development, and operation of oil and natural gas properties in North America. The company holds interests in various properties located in the Permian Basin region in west Texas and southeast New Mexico; the Mid-Continent region in Oklahoma and east Texas; and the Gulf Coast region in Texas.
6) Hercules Technology Growth Capital, Inc. (HTGC)
Hercules Technology Growth Capital, Inc. has a Dividend Yield of 8.45%, Payout Ratio of 62.62%, Analysts' Rating of 1.90, Operating Profit Margin of 49.55%, and Earnings Per Share Growth Rate of 796.64%. The short interest was 5.53% as of 08/15/2012. Hercules Technology Growth Capital, Inc. is a private equity, venture capital, and venture debt firm specializing in providing debt and equity to privately held venture capital and private equity backed companies and select publicly-traded companies. The firm is also a Small Business Investment Company. It offers growth and emerging growth capital and structured debt financing to companies at all stages of development and specializes in venture debt in the forms of senior secured and subordinated working capital loans, senior revolving loans and bridge loans, venture leasing, and select direct equity capital.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.