11 Best Micro-Cap Dividend Stocks To Buy Now

In this article, we discuss 11 best micro-cap dividend stocks to buy now.

If chosen wisely, micro-cap companies present significant upside growth potential that is not offered by large-cap companies. However, these securities are considered riskier because of the small shareholder base and lack of liquidity. Despite this, micro-cap stocks have delivered stable returns to shareholders over the years.

Historically, micro-cap companies have outperformed other equities. According to a report by Ariel Investments, micro-cap stocks delivered an annual average return of 12.1% from 1926 to 2009, compared with a 9.8% return for large-cap companies. The report also mentioned that these smaller companies improve a portfolio’s risk/return characteristics. In a typical stocks/bond portfolio, the investments in micro-caps resulted in the growth of the annual average returns of the portfolio from 1978 to 2003.

Another report published by Perritt Capital Management sheds light on Small Stock Theory by Rolf Banz. According to this theory, Banz’s four portfolios with large-cap companies delivered him an average risk-adjusted monthly return of -0.06% in five years, while his portfolio of smaller companies provided a risk-adjusted monthly return of 0.44%.

This year’s economic landscape has brought dividend stocks into the limelight. Dividend stocks like Caterpillar Inc. (NYSE:CAT), Chevron Corporation (NYSE:CVX), and Pentair plc (NYSE:PNR) are grabbing investors’ attention because of their consistent dividend growth and sound financials.

However, in this article, our focus would be micro-cap dividend stocks.

Photo by Stephen Dawson on Unsplash

Our Methodology:

The companies mentioned below have a market capitalization between $50 million to $300 million. We analyzed these stocks through their dividend policies and overall financials. The stocks are ranked according to their dividend yields, as of November 30.

Best Micro-Cap Dividend Stocks To Buy Now

11. Industrial Logistics Properties Trust (NASDAQ:ILPT)

Dividend Yield as of November 30: 1.00%

Industrial Logistics Properties Trust (NASDAQ:ILPT) is an American real estate investment trust company that invests in industrial and logistics properties throughout the US. B. Riley maintained a Buy rating on the stock in October with an $11 price target, highlighting the company’s interest expense and overall fundamentals.

In Q3 2022, Industrial Logistics Properties Trust (NASDAQ:ILPT) reported revenue of $103.2 million, which showed an 87.7% growth from the same period last year. At the end of September, the company had $26.3 million available in cash and cash equivalents, and its total assets amounted to over $5.7 billion.

Industrial Logistics Properties Trust (NASDAQ:ILPT) currently pays a quarterly dividend of $0.01 per share, with a dividend yield of 1.00%, as of November 30. The company can be a good option for diversified dividend portfolios alongside some of the best dividend stocks like Caterpillar Inc. (NYSE:CAT), Chevron Corporation (NYSE:CVX), and Pentair plc (NYSE:PNR).

Industrial Logistics Properties Trust (NASDAQ:ILPT) was a popular stock among hedge funds in Q3 2022, as 15 funds tracked by Insider Monkey owned stakes in the company, up from 9 in the previous quarter. The collective value of these stakes is nearly $29 million. Citadel Investment Group was the company’s leading stakeholder in Q3.

10. Franklin Street Properties Corp. (NYSE:FSP)

Dividend Yield as of November 30: 1.44%

Franklin Street Properties Corp. (NYSE:FSP) is an American commercial real estate and insurance brokerage firm. In Q3 2022, the company reported an FFO of $0.09 and its revenue came in at $40.8 million. It had $8.7 million available in cash and cash equivalents and its total assets for the quarter stood at over $1.2 billion.

Following the company’s quarterly earnings, B. Riley maintained a Buy rating on Franklin Street Properties Corp. (NYSE:FSP) with a $4.50 price target.

On October 7, Franklin Street Properties Corp. (NYSE:FSP) declared a quarterly dividend of $0.01 per share, which fell in line with its previous dividend. The stock has a dividend yield of 1.44%, as of November 30.

At the end of Q3 2022, 12 hedge funds tracked by Insider Monkey reported owning stakes in Franklin Street Properties Corp. (NYSE:FSP), up from 11 in the previous quarter. The collective value of these stakes is over $9.1 million. Jim Simons, Ken Griffin, and Cliff Asness were some of the company’s major stakeholders in Q3.

9. PHX Minerals Inc. (NYSE:PHX)

Dividend Yield as of November 30: 2.20%

PHX Minerals Inc. (NYSE:PHX) is an American natural gas and oil mineral company, based in Oklahoma. In October, Northland assumed its coverage on the stock with an Outperform rating and a $6 price target. The firm appreciated the company’s increasing natural gas exports to Mexico via pipeline.

In the third quarter of 2022, PHX Minerals Inc. (NYSE:PHX) reported revenue of $19.5 million, which showed a significant 230% growth from the same period last year. The company’s operating cash flow for the quarter came in at $8.4 million, compared with $5.5 million in the previous quarter.

On October 18, PHX Minerals Inc. (NYSE:PHX) declared a quarterly dividend of $0.02 per share, consistent with its previous dividend. The stock’s dividend yield on November 30 came in at 2.20%.

At the end of Q3 2022, 7 hedge funds tracked by Insider Monkey held investments in PHX Minerals Inc. (NYSE:PHX), worth $5.2 million collectively.

8. Adams Resources & Energy, Inc. (NYSE:AE)

Dividend Yield as of November 30: 2.47%

Adams Resources & Energy, Inc. (NYSE:AE) is a Texas-based energy company that is engaged in the marketing of crude oil, natural gas, and liquid chemical products. The company is one of the best dividend stocks on our list as it has been making consecutive dividend payments since 1994. It currently pays a quarterly dividend of $0.24 per share and has a dividend yield of 2.47%, as of November 30.

In Q3 2022, Adams Resources & Energy, Inc. (NYSE:AE) reported revenue of $853 million, which presented a 50% growth from the same period last year. The company remained committed to its shareholder obligation, returning $1.1 million in dividends during the quarter. It had over $86.5 million in cash and cash equivalents at the end of September.

In November, B. Riley raised its price target on Adams Resources & Energy, Inc. (NYSE:AE) to $55 with a Buy rating on the shares, appreciating the company’s share repurchase program.

As of the close of Q3 2022, 3 hedge funds tracked by Insider Monkey owned stakes in Adams Resources & Energy, Inc. (NYSE:AE), the same as in the previous quarter. These stakes are worth nearly $8 million collectively. Renaissance Technologies owned the largest stake in the company in Q3.

7. Information Services Group, Inc. (NASDAQ:III)

Dividend Yield as of November 30: 3.07%

Information Services Group, Inc. (NASDAQ:III) is an American technology research and advisory firm that specializes in digital transformation and cloud. In Q3 2022, the company posted an EPS of $0.14 and its revenue stood at $69 million. It had over $19.7 million in cash at the end of September. Moreover, the company paid $2 million in dividends during the quarter, which makes it one of the best dividend stocks on our list.

Barrington maintained an Outperform rating on Information Services Group, Inc. (NASDAQ:III) this August with a $9 price target. The firm appreciated the company’s quarterly earnings and its overall performance this year.

Information Services Group, Inc. (NASDAQ:III) initiated its dividend policy in 2021 and has raised its payout once since then. It currently pays a quarterly dividend of $0.04 per share and has a dividend yield of 3.07%, as of November 30.

As of the close of Q3 2022, 15 hedge funds in Insider Monkey’s database owned stakes in Information Services Group, Inc. (NASDAQ:III), compared with 16 in the previous quarter. The collective value of these stakes is over $37.5 million. With over 4 million shares, Private Capital Management was the company’s leading stakeholder in Q3.

6. Kimball International, Inc. (NASDAQ:KBAL)

Dividend Yield as of November 30: 5.10%

Kimball International, Inc. (NASDAQ:KBAL) is an Indiana-based furniture company that also provides design and product solutions to its consumers. The company is one of the best dividend stocks on our list as it has raised its dividends at a CAGR of 7.57% in the past five years. It pays a quarterly dividend of $0.09 per share and has a dividend yield of 5.10%, as of November 30.

In addition to some of the major dividend stocks like Caterpillar Inc. (NYSE:CAT), Chevron Corporation (NYSE:CVX), and Pentair plc (NYSE:PNR), investors are also considering Kimball International, Inc. (NASDAQ:KBAL) due to the company’s growth prospects.

Benchmark initiated its coverage of Kimball International, Inc. (NASDAQ:KBAL) with a Buy rating in November with a $12 price target. The firm mentioned that the company is soon to be a profitable organization.

In fiscal Q1 2023, Kimball International, Inc. (NASDAQ:KBAL) reported revenue of $177.8 million, which showed a 13.5% growth from the same period last year. The company’s net income came in at $6.6 million. It had $16.7 million available in cash and cash equivalents at the end of September, up from $11 million three months ago. The company paid $4.3 million to shareholders in dividends during the quarter.

At the end of Q3 2022, Kimball International, Inc. (NASDAQ:KBAL) was a part of 14 hedge fund portfolios, as per Insider Monkey’s data. The stakes owned by these hedge funds have a total value of over $15.6 million.

5. Evolution Petroleum Corporation (NYSE:EPM)

Dividend Yield as of November 30: 6.50%

Evolution Petroleum Corporation (NYSE:EPM) is a Texas-based independent energy company that invests in onshore oil and natural gas properties in the US. In November, Roth upgraded the stock to Buy with a $9.50 price target, appreciating the company’s business model, strong dividends, and balance sheet.

On November 8, Evolution Petroleum Corporation (NYSE:EPM) declared a quarterly dividend of $0.12 per share, in line with its previous dividend. The company has raised its dividends twice this year, which makes it one of the best dividend stocks on our list. As of November 30, the stock has a yield of 6.50%. The company has been making consecutive dividend payments for the past 37 quarters.

In the third quarter of 2022, Evolution Petroleum Corporation (NYSE:EPM) reported revenue of $39.7 million, which showed a 110.3% growth from the same period last year. At the end of September, the company had over $10.7 million available in cash and cash equivalents, up from $8.2 million three months ago.

At the end of Q3 2022, 16 hedge funds tracked by Insider Monkey owned stakes in Evolution Petroleum Corporation (NYSE:EPM), up from 13 in the previous quarter. The collective value of these stakes is over $22.4 million. With 1.7 million shares, Renaissance Technologies was the company’s largest stakeholder in Q3.

Steel City Capital mentioned Evolution Petroleum Corporation (NYSE:EPM) in its Q1 2022 investor letter. Here is what the firm has to say:

“Evolution Petroleum Corporation (NYSE: EPM): EPM is a small oil & gas company that owns a portfolio of diversified oil, natural gas, and NGL producing properties. EPM is atypical in the sense that it specifically focuses on non-operating working & revenue interests of producing assets that are in the twilight years of their lives. These assets require fairly minimal capital and have steady, predictable production profiles. Historically, EPM was a less attractive single-asset business, owning only a 23.9%/26.2% working/revenue interest in Denbury’s Delhi field, which is predominantly an oil asset. In recent years, however, management has meaningfully diversified, adding a total of four additional production assets to its portfolio. Pro-forma for its most recent acquisitions, EPM’s production mix is 43% oil, 40% natural gas, and 17% NGL. One of the more important factors that attracted me to EPM was management’s philosophy to operate an unhedged book1 . I subscribe to the school of thought that 1) years of underinvestment in upstream projects has resulted in a structural supply deficit that should be supportive of pricing for some time and 2) commodity exposure is an important hedge against rising inflation. Shares trade at an EV/EBITDA multiple in the mid-2x range and offer a mid-single-digit dividend yield.”

4. Stellus Capital Investment Corporation (NYSE:SCM)

Dividend Yield as of November 30: 8.17%

Stellus Capital Investment Corporation (NYSE:SCM) is an American credit management company that mainly invests in lower middle market companies. In Q3 2022, the company reported a total investment income of $20.1 million, which showed an 18.3% growth from the prior-year period. At the end of September, the company had over $12.4 million in cash and cash equivalents, and its total assets for the period amounted to $889 million.

Stellus Capital Investment Corporation (NYSE:SCM) currently pays a quarterly dividend of $0.933 per share. In October, the company also announced a special dividend of $0.02 per share, which was the company’s second consecutive supplemental dividend. This makes the company one of the best dividend stocks. As of November 30, the stock has a dividend yield of 8.17%.

Janney Montgomery initiated its coverage of Stellus Capital Investment Corporation (NYSE:SCM) with a Neutral rating. The firm highlighted the company’s acquisitions, growth capital, and leveraged buyouts.

At the end of Q3 2022, Two Sigma Advisors was the only hedge fund owning stakes in Stellus Capital Investment Corporation (NYSE:SCM), worth $996 million.

3. FAT Brands Inc. (NASDAQ:FAT)

Dividend Yield as of November 30: 8.36%

FAT Brands Inc. (NASDAQ:FAT) is a California-based multi-brand restaurant operator that acquires and develops fast casual and casual dining restaurants. The company initiated its dividend policy in 2018 and has raised its payouts twice since then. It currently pays a quarterly dividend of $0.14 per share and has a dividend yield of 8.36%, as of November 30.

In Q3 2022, FAT Brands Inc. (NASDAQ:FAT) reported revenue of $1032. million, up from $29.8 million in the same period last year. In the first nine months of the year, the company’s system-wide same-store sales grew by 7%, compared with a prior-year period. Moreover, it opened 38 new stores during the quarter.

ADW Capital was the only hedge fund owning stakes in FAT Brands Inc. (NASDAQ:FAT) in Q3 2022. The total value of these stakes is over $4.3 million.

2. Cross Timbers Royalty Trust (NYSE:CRT)

Dividend Yield as of November 30: 8.89%

Cross Timbers Royalty Trust (NYSE:CRT) is an express trust that collects and distributes monthly net profits to shareholders. In the second quarter of 2022, the company reported cash and short-term investments worth $2.6 million, up from $1.8 million at the end of December 2021. The company’s net profits income was $3.7 million, compared with $1.7 million from the same period last year. Its distribution to unitholders amounted to $1.6 million, up from $822,744 six months ago.

On November 18, Cross Timbers Royalty Trust (NYSE:CRT) declared an 8% increase in its monthly payout to $0.161 per share. The stock has a dividend yield of 8.89%, as recorded on November 30.

As of the close of Q3 2022, Citadel Investment Group was the only hedge fund owning stakes in Cross Timbers Royalty Trust (NYSE:CRT), worth $216,000.

1. Mesabi Trust (NYSE:MSB)

Dividend Yield as of November 30: 24.9%

Mesabi Trust (NYSE:MSB) is a New York-based royalty trust that operates in the iron ore mining segment. The trust mainly derives its income from an iron ore mine in Minnesota. The company currently pays a quarterly dividend of $0.84 per share and has a dividend yield of 24.9%, as of November 30.

At the end of September 2022, 7 hedge funds in Insider Monkey’s database owned stakes in Mesabi Trust (NYSE:MSB), up from 4 in the previous quarter. The collective value of these stakes is over $81.4 million. With over 2.5 million shares, Horizon Asset Management was the company’s leading stakeholder in Q3.

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Disclosure. None. 11 Best Micro-Cap Dividend Stocks To Buy Now is originally published on Insider Monkey.