10 Small-Cap Dividend Stocks Drive Year-to-Date Gains

2. Capital Southwest Corporation (NASDAQ:CSWC)

Dividend yield: 10.91%

Dividend payout ratio: 180.71%

Ex-Dividend Date: March 14, 2025

Number of Hedge Funds: 5

The valuation of Capital Southwest Corporation (NASDAQ:CSWC) has grown by 6.80% this year, as of February 24, 2025, reaching a market cap of $1.18 billion.

The US-based business development company saw an increase in its investment income by the end of the second quarter of 2024, to $51.4 million, owing to the rise in the average monthly cost basis of investments held, amendment fees received during the quarter, and distributions received from the equity investments. The company also issued common stock at a premium to Net Asset Value (NAV) per share through its Equity ATM Program. Capital Southwest Corporation’s NAV at the end of the third and fourth quarters of 2025 stood at $16.50 per share. The increase in NAV helped the company offset its net realized and unrealized investment losses. It reflected positively on the valuation of Capital Southwest Corporation.

Capital Southwest Corporation (NASDAQ:CSWC) delivers a solid 10.91% dividend yield using a large payout ratio of 180.71%. The payout ratio suggests using 1.81 times the earnings to meet the dividend payment obligations. It signals a risky investment since the company could use debt to cover the dividend payouts. Institutional interest is quite low, with only five hedge fund portfolios holding onto the stock. Investors purchasing the stocks before March 14, 2025, can receive the next dividend on March 31, 2025.