This article will look into the 10 small-cap dividend stocks that have driven year-to-date gains.
Generally, large-cap stocks stand at the top of investment discussions. However, small-cap stocks, with a market capitalization between $300 million and $2 billion, have often offered attractive growth opportunities. Investors interested in a mix of income and capital growth frequently find this market segment substantially valuable. Some companies demonstrating strong financial health and consistency in their dividend payments may be what they are looking for.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
At times, investors overlook small-cap dividend stocks because they perceive smaller companies as less stable than their large-cap counterparts. However, few small-cap companies have successfully utilized their niche positioning and implemented effective capital allocation strategies to generate strong returns. Many large-cap peers face a slower growth rate during market saturation, while small-cap companies expand rapidly. It leads to an appreciation in the share price, often contributing to growth in the dividend income.
Several macroeconomic and sector-specific factors contributed to the strong performance of small-cap dividend stocks this year. These factors include stabilizing interest rates, increased demand in niche industries, and sector-specific tailwinds benefiting smaller firms. For instance, the market sentiment towards dividend stocks, particularly those with earnings growth, could improve with stabilized interest rates. Monetary policies, such as interest rate changes, directly impact small-cap dividend stocks by influencing borrowing costs and corporate reinvestment strategies. Furthermore, when met with high demand, developing specific industries like technology and consumer discretionary benefits the smaller companies that cater to such market segments. In this article, we will look deeper into the factors and events contributing to the rise of small-cap dividend stocks. Understanding the reasons behind the rise or fall of these stocks is necessary before deciding in favor of or against them.
Small-cap dividend stocks might be appealing, but not solely because of their potential capital appreciation. Many of these companies provide a higher dividend yield than their larger-cap counterparts. Many small-cap companies offer high yields to attract investors and create long-term shareholder value. Some dividend reinvestment strategies bring an upward trend to the returns, compounding gains over time. However, investors need to analyze the sustainability of these dividends to make an informed decision. The article will help you with this analysis.
As we deeply explore the ten small-cap dividend stocks driving year-to-date gains, we must consider the stocks’ financial health and future growth potential. Our list comprises companies that have delivered strong returns in the recent year. Before making the investment decision, however, investors are asked to consider the ability of these stocks to sustain their dividend payouts and the potential to increase them in the future. You may be looking to optimize your portfolio by including income-generating assets or simply seeking to use the high-growth opportunities presently available in the market. Either way, our list provides compelling investment prospects for you to consider.
Stay with us as we count down from 10 to 1, the top performers this year. Our first placer may surprise you.
Our Methodology
In our article, we have listed 10 small-cap dividend stocks with market capitalizations ranging from $300 million to $2 billion. We compiled the list by considering only those small-cap companies with year-to-date (YTD) returns of at least 4%. We also eliminated from our list the companies that do not meet a minimum dividend yield of 2%. With these criteria, we wanted to focus on capital appreciation and income generation on our list. Small-cap companies meeting these benchmarks will be helpful for investors who are focused on consistency in income generation and may intend to make informed decisions about their investment portfolios. The stocks are ranked according to their dividend yields, as of February 23.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. AdvanSix Inc. (NYSE:ASIX)
Dividend yield: 2.15%
Dividend payout ratio: 39.51%
Ex-Dividend Date: March 10, 2025
Number of Hedge Funds: 15
With the current market cap of $795.96 million, AdvanSix Inc. (NYSE:ASIX) experienced a year-to-date increase of 4.49% as of February 24, 2025.
The American-based company produces nylon six and related chemicals such as caprolactam and ammonium sulfate fertilizers. In North America, the demand for sulfur nutrition is rising, while the supply of ammonium sulfate remains tight, contributing to an increase in the value of AdvanSix Inc. The company’s commitment to sustainability, demonstrated by its program SUSTAIN (Sustainable U.S. Sulfate to Accelerate Increased Nutrition), is also widely recognized. With this program, the company is in the green chemicals market, which is valued at $108.53 billion, further contributing to the company’s value. However, AdvanSix Inc. (NYSE:ASIX)’s customer sales declined because of the extended plant turnaround. Additionally, the upward raw material prices are expected to impact fertilizer margins.
The dividend yield is 2.15%, and the dividend payout ratio is 39.51%. AdvanSix Inc. (NYSE:ASIX) can cover its dividend payments using only its earnings—close to two-thirds of its earnings are used for reinvestment or debt repayment. The Insider Monkey database indicates 15 hedge fund portfolios holding stakes in the company’s stocks at the end of Q4 2024, indicating a solid institutional interest in the company. Investors wanting to benefit from the dividend payout on March 24, 2025, can purchase the company Before March 10, 2025.
9. Northrim BanCorp, Inc. (NYSE:NRIM)
Dividend yield: 3.16%
Dividend payout ratio: 37.16%
Ex-Dividend Date: March 6, 2025
Number of Hedge Funds: 7
With a 4.20% increase in value this year, as of February 24, 2025, the market cap of Northrim BanCorp, Inc. (NYSE:NRIM) currently stands at $446.81 million.
The Alaska-based bank holding company saw an increase in deposits and loans by 7% compared to the second quarter of 2024. The share of the deposit market has grown, increasing by 4% in the last year and a notable 42% over the past five years. Additionally, the acquisition of Sallyport Commercial Finance, LLC on October 31, 2024, increased the purchase receivable income, which later translated to an increase in Northrim BanCorp, Inc. (NYSE:NRIM)’s value. Another significant contributor was the increase in mortgage banking income in the fourth quarter, caused by an increase in the fair value of a mortgage servicing portfolio that the company purchased from another financial institution. Northrim BanCorp, Inc. is also part of our top 15 dividend contenders list.
The company offers a dividend yield of 3.16%. Northrim BanCorp, Inc. (NYSE:NRIM)’s payout ratio of 37.16% suggests that the company is generating more earnings than required to cover its dividend payments. From the Insider Monkey database, seven hedge fund portfolios owned stakes in the company at the end of Q4 2024. Investors can purchase the shares before March 6, 2025, and receive dividend payments on March 14, 2025.
8. Centerra Gold Inc. (NYSE:CGAU)
Dividend yield: 3.18%
Dividend payout ratio: 58.50%
Ex-Dividend Date: March 13, 2025
Number of Hedge Funds: 16
The Canadian mining company, Centerra Gold Inc. (NYSE:CGAU) has grown 11.15% year-to-date, bringing its market cap to $1.30 billion as of February 24, 2025.
During the first quarter of 2024, the company announced an agreement with Royal Gold. The agreement extended the life of the Mount Milligan mine to 2036, establishing favorable parameters for future extensions. The company managed this by accelerating the use of mined-out areas of the open pit for waste storage. The approach increased the storage capacity in the existing tailings facility, leading to an extended mine life for the current reserves estimate. Additionally, the infill drilling in the MBX zone indicates potential for resource expansion.
The dividend yield offered by Centerra Gold Inc. (NYSE:CGAU) stands at 3.18%. The company’s dividend payout ratio has been set at 58.50%, pointing to a balance between earnings used for paying dividends to the shareholders and earnings retained for reinvestments and debt repayment purposes. From the Insider Monkey database, 16 hedge fund portfolios own stakes in Centerra Gold Inc. (NYSE:CGAU) It suggests a strong institutional interest in the company’s stocks. The ex-dividend date announced by the company is March 13, 2025.
7. Civeo Corporation (NYSE:CVEO)
Dividend yield: 3.66%
Dividend payout ratio: 71.43%
Ex-Dividend Date: February 24, 2025
Number of Hedge Funds: 14
Civeo Corporation (NYSE:CVEO) is another entrant in our list with a market cap of $376.14 million, contributed by a 20.20% year-to-date increase, as of February 24, 2025.
In the recent quarter of 2024, the U.S. accommodation services multinational corporation announced that it acquired a 6-year contract extension with a leading resources player to provide integrated services at 11 villages in Western Australia. The company began its services on January 1, 2025. Because of the contract, the scope of Civeo has increased from operating 7 villages to 11 villages.
Bradley J. Dodson, President and Chief Executive Officer of Civeo, stated the following about this:
“This achievement not only shows the strength of our long-term customer relationships but also brings us closer to achieving our Australian integrated services revenue target of $A500 million by 2027. We expect to reach $A340 million of revenue in 2024 in Australia, up from A$40 million of revenue we achieved when we first entered the Australian integrated services market in 2019.”
Civeo Corporation (NYSE:CVEO) anticipates a total revenue of AUD 1.4 billion from the contract, thus gaining a positive outlook from the market analysts.
The dividend yield of 3.66% offered by the company is covered by its payout ratio of 71.43%, indicating the company’s ability to generate more than enough earnings to make dividend payments. 14 hedge fund portfolios on Insider Monkey’s list, held onto the stocks of the company at the end of Q4 2024. February 24, 2025, is the final date for purchasing the stocks if the investor intends to benefit from dividend payments on March 17, 2025.
6. Danaos Corporation (NYSE:DAC)
Dividend yield: 4.01%
Dividend payout ratio: 11.08%
Ex-Dividend Date: February 24, 2025
Number of Hedge Funds: 12
Danaos Corporation (NYSE:DAC) has achieved a 5.81% gain this year, bringing its market capitalization to $1.64 billion as of February 24, 2025. The stock was also a part of last week’s 10 best dividend stocks.
One of the world’s largest owners of containerships, Danaos Corporation (NYSE:DAC), ordered two new container vessels to be delivered in 2026 and 2028, enhancing its fleet to capture the rising demand in the market. Additionally, the company has secured an $850 million syndicated loan facility to fund its remaining new building container vessels, including the two newly ordered and the previously ordered. All new builds are chartered for five years, gaining a positive outlook from analysts. Danaos also repurchased an additional $45.6 million in shares since the last earnings release. The total repurchases are $168.8 million out of the $200 million authorized, bringing the current share count to just below 19 million.
Danaos Corporation (NYSE:DAC) offers a dividend yield of 4.01% with a payout ratio of 11.08%, indicating that it keeps most of its earnings for expansion or debt clearance purposes. Institutional investors remain bullish, with 12 hedge funds from a database of Insider Monkey onboard the stocks, as of Q4 2024. Income-focused investors may benefit from the dividend payout on March 5, 2025, if they purchase the stocks of Danaos Corporation on or before February 24, 2025.
5. Financial Institutions, Inc. (NASDAQ:FISI)
Dividend yield: 4.33%
Dividend payout ratio: 37.85%
Ex-Dividend Date: March 14, 2025
Number of Hedge Funds: 6
The market capitalization of Financial Institutions, Inc. (NASDAQ:FISI) now stands at $575.61 million, reflecting a solid 5.02% growth in 2025 so far.
The board of directors approved the financial holding company, headquartered in Western New York, to increase the cash dividend payable to outstanding common shares to $0.31. The announcement follows Angela J. Panzarella’s appointment to the board of directors. In the fourth quarter, the company sold $653.5 million of available-for-sale (“AFS”) investment securities as part of its restructuring. Financial Institutions, Inc. (NASDAQ:FISI) used the net proceeds from the pre-tax sale of the securities to fund its reinvestment of higher-yielding, agency-wrapped investment securities valued at $566.2 million. The sales and reinvestment together contributed to the increase in the company’s value.
Financial Institutions, Inc. (NASDAQ:FISI) offers a 4.33% dividend yield with a manageable 37.85% payout ratio. Nearly two-thirds of earnings are retained for growth or debt reduction. With six hedge funds in our Insider Monkey database investing in the stock, the institutional interest in the stocks stands low. To benefit from the increased dividend payout on April 2, 2025, investors should buy shares before March 14, 2025.
4. CBL & Associates Properties, Inc. (NYSE:CBL)
Dividend yield: 5.11%
Dividend payout ratio: 85.56%
Ex-Dividend Date: March 13, 2025
Number of Hedge Funds: 20
With a year-to-date increase of 6.46%, CBL & Associates Properties, Inc. (NYSE:CBL) currently boasts a market cap of $961.57 million as of February 24, 2025.
The American real estate investment trust company sold the Imperial Valley Mall in El Centro, CA, for $38.1 million, and the transaction was completed in all cash. CBL & Associates Properties, Inc. (NYSE:CBL) applied the net proceeds from the sales to the term loan principal balance, reducing it to $630.8 million. With reduced debt, the company will meet the non-recourse term loan principal balance extension test in November 2025 without raising further capital. The decline in debt value reduced the risk of default, contributing to the recent increase in the company’s value. The company was also part of last week’s 10 best dividend stocks.
CBL & Associates Properties, Inc. (NYSE:CBL) maintains a healthy 5.11% yield but a high payout ratio of 85.56%. Though it ensures the complete support of dividends by earnings, it reduces the fund-at-hand for the company to reinvest in business opportunities or restructure its debt. However, hedge fund confidence is evident, with 20 hedge funds in the Insider Monkey database holding positions. Investors purchasing the stock on or before March 13, 2025, will benefit from the dividend payment on March 31, 2025.
3. Safe Bulkers, Inc. (NYSE:SB)
Dividend yield: 5.36%
Dividend payout ratio: 24.10%
Ex-Dividend Date: March 3, 2025
Number of Hedge Funds: 11
Safe Bulkers, Inc. (NYSE:SB) is one of the smallest market caps on our list with a value of $392.77 million, achieved through a year-to-date growth of 4.48%. as of February 24, 2025.
The Greece-based international provider of marine dry-bulk transportation services transports bulk cargoes, particularly grain, iron ore, and coal. As of the last quarter of 2024, the company has eleven Phase 3 vessels. Each built after 2022. Safe Bulkers, Inc. (NYSE:SB) has ordered seven additional Phase 3 boats to meet the emerging demand. Including 11 eco-vessels, the company has upgraded 23 vessels environmentally. In doing so, the company increases its compliance with evolving regulations and maintains market competitiveness. The upgraded vehicles are earnings premium charter rates for the company, covering their costs. Furthermore, during the last quarter of 2024, the company authorized a share repurchase program, which would allow the company to repurchase its shares in the future up to 5,000,000.
Safe Bulkers, Inc. (NYSE:SB) offers a dividend yield of 5.36%. The payout ratio has been set at 24.10%. The company retains over 75% of its earnings for reinvestment and debt repayment. Eleven hedge fund portfolios followed by Insider Monkey held stakes in the company at the end of Q4 2024. With March 21, 2025, set as the dividend payment date, the investors looking to benefit from the dividend must purchase stocks before March 3, 2025.
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.
1. Dynex Capital, Inc. (NYSE:DX)
Dividend yield: 14.51%
Dividend payout ratio: 107.38%
Ex-Dividend Date: February 24, 2025
Number of Hedge Funds: 14
Dynex Capital, Inc. (NYSE:DX) has seen an 11.15% uptick in value this year, bringing its market cap to $1.19 billion as of February 24, 2025.
The real estate investment trust company based in Virginia announced an increase in its monthly dividend from $0.15 to $0.17 per share for March 2025. According to Co-CEO and President of the company, Smriti L. Popenoe,
“This increase is supported by the favorable investing environment and our confidence in the Company’s ability to generate attractive returns.”
In addition to generating $332 million in equity capital through at-the-market common stock issuances, Dynex Capital, Inc. (NYSE:DX) saw a 36% increase in its average balance of interest-earning assets. Also, the lower interest expenses on repurchase agreement borrowings resulting from the Federal Reserve’s recent interest rate cuts helped the company increase the ordinary shareholders’ income for the fourth quarter.
Dynex Capital, Inc. (NYSE:DX) offers a high dividend yield of 14.51%, covered by a payout ratio of 107.38%, indicating the possibility of dividend finance through debt. Fourteen hedge fund portfolios in the Insider Monkey database are holding stakes in the company, as of Q4 2024. It suggests a strong institutional interest. Investors who have purchased stocks on or before February 24, 2025, will receive dividend payments on April 1, 2025.
Overall Dynex Capital, Inc. (NYSE:DX) ranks first on our list of 10 small-cap dividend stocks that drive year-to-date gains. While we acknowledge the potential for DX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
