Dividend stocks at the small-cap level can fit the bill for investors who are looking for both growth and additional income. Especially, if the dividend stocks offer moderate to high yields. To find small-cap dividend stocks that appear to be well positioned for growth, we first looked at profit and took a close look at both the rate of income generated from assets as well as operational efficiency.
All of the companies in our list today have the positive attribute of increasing profitability over time. We then focused on debt ratios to find companies that have manageable to negligible debt. By keeping debt low, these companies can remain focused on running a tight ship that is well prepared for expansion. We think you will like the list of small-cap dividend stocks we uncovered.
The Debt/Equity Ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.
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.
Return on Assets [ROA] illustrates how much a company is generating in earnings from its assets alone. This metric gives investors a picture of how profitable the company is relative to the assets in current possession. As well, it lets investors see how efficient and effective management is at generating earnings from the company's assets. While most management teams can probably make money by throwing money at an issue very few can make very large profits with little investment.
We first looked for small-cap dividend stocks. We then looked for businesses that operate with little to no debt (D/E Ratio<.1). We then looked for companies with strong profit margins (1-year operating margin>15%)(ROA [TTM]>10%). We did not screen out any sectors.
Do you think these small-cap stocks will break through to new highs? Please use our list to assist with your own analysis.
1) Computer Programs & Systems Inc. (CPSI)
|Industry||Healthcare Information Services|
|Operating Profit Margin||22.40%|
|Return on Assets||34.59%|
Computer Programs and Systems, Inc., a healthcare information technology company, designs, develops, markets, installs, and supports computerized information technology systems to small and midsize hospitals in the United States. Its enterprise-wide system automates the management of clinical and financial data across the primary functional areas of a hospital. The company offers services that enable customers to outsource certain data-related business processes in the areas of clinical care, revenue cycle management, cost control, and regulatory compliance.
Its software products include Patient Management, which enables a hospital to identify a patient at any point in the healthcare delivery system, and to collect and maintain patient information through the process of patient care; Financial Accounting that provides various business office applications to track and coordinate information needed for managerial decision-making; and Clinical, which automates record keeping and reporting for a range of clinical functions, such as laboratory, radiology, physical therapy, respiratory care, and pharmacy.
The company's software products also comprise Patient Care that allows hospitals to create computerized patient files; and Enterprise Applications, which provide software applications that support its products for use in various areas of the hospital. In addition, it offers support and maintenance services; business management services, including electronic billing, statement processing, accounts receivable management, payroll processing, contract management, and insurance services; and system implementation and training services, such as conversion and training. Further, the company sells computer hardware, peripherals, forms, and office supplies. It serves acute care community hospitals; and small specialty hospitals that focus on medical areas, such as surgery, rehabilitation, and psychiatry. The company was founded in 1979 and is headquartered in Mobile, Alabama.
2) Gold Resource Corp (GORO)
|Operating Profit Margin||48.41%|
|Return on Assets||83.21%|
Gold Resource Corporation, an exploration stage company, engages in the exploration for and production of gold and silver in Mexico. It also explores copper, lead, and zinc ores. The company holds a 100% interest in 6 properties, including the El Aguila Project, the El Rey property, the Las Margaritas property, the Solaga property, the Alta Gracia property, and the El Chamizo property located in southern State of Oaxaca. Gold Resource Corporation was founded in 1998 and is based in Colorado Springs, Colorado.
3) Crexus Investment Corp. (CXS)
|Industry||REIT - Diversified|
|Operating Profit Margin||86.06%|
|Return on Assets||11.25%|
CreXus Investment Corp., through its subsidiaries, operates as a commercial real estate company. It acquires, manages, and finances commercial mortgage loans and commercial real estate debts, commercial real properties, commercial mortgage-backed securities, other commercial real estate-related assets, and agency residential mortgage-backed securities. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was founded in 2008 and is based in New York, New York.
4) ECA Marcellus Trust I (ECT)
|Industry||Oil & Gas Drilling & Exploration|
|Operating Profit Margin||97.79%|
|Return on Assets||12.29%|
ECA Marcellus Trust I holds royalty interests in producing and development horizontal natural gas wells for Energy Corporation of America. It owns royalty interests in 14 producing horizontal natural gas wells producing from the Marcellus Shale formation located in Greene County, Pennsylvania; and royalty interests in 52 horizontal natural gas development wells to be drilled to the Marcellus Shale formation consisting of approximately 9,300 acres held by ECA in Greene County, Pennsylvania. The company's royalty interests in the producing wells entitle the company to receive 90% of the proceeds from the sale of production of natural gas attributable to ECA's interest in the producing wells. Its royalty interests in the development wells allow the company to receive 50% of the proceeds from the sale of production of natural gas attributable to ECA's interest in the development Wells. ECA Marcellus Trust I was founded in 2010 and is based in Austin, Texas.
5) Mesabi Trust (MSB)
|Operating Profit Margin||97.12%|
|Return on Assets||235.38%|
Mesabi Trust operates as a royalty trust in the United States. The company produces iron ore pellets. It holds interests the Peter Mitchell mine located at the eastern end of the Mesabi Iron Range, near Babbitt, Minnesota. The company holds various agreements with the Northshore Mining Company that mines iron ore, which is in the form of taconite, crushes it, separates the iron particles from the non-metallic, and forms the resulting concentrate into pellets that are shipped for use in steel-producing blast furnaces of customers of CCI, a mining company in North America. Mesabi Trust was founded in 1919 and is based in New York, New York.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/12/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.