Investors who prefer to receive income from their stocks likely know of most of the market’s biggest dividend payers. When you think of dividend stocks, the usual suspects probably come to mind: namely, one of the many blue-chips with market capitalizations in the hundreds of billions. What you might not know is that many of the market’s smaller publicly traded companies pay dividends too. Sometimes, savvy dividend investors can find bigger yields than they’re accustomed to simply by turning over a few extra rocks.
One pick for pet lovers
Petmed Express Inc (NASDAQ:PETS) carries a market value of $262 million. The company sells prescription and non-prescription pet medications, health products, and supplies for dogs and cats in the United States. Dividend and value investors alike will find a lot to like about Petmed Express Inc (NASDAQ:PETS). The stock trades for a reasonable trailing price-to-earnings ratio of 17 times and offers a hefty yield greater than 4.5% at recent prices.
Petmed Express Inc (NASDAQ:PETS) raised its dividend a whopping 20% in February 2012. Investors would be wise to monitor the company’s operating performance going forward, as fiscal 2012 was a difficult year. Sales over the first nine months of the fiscal year dropped 3% year over year. To the company’s credit, Petmed Express Inc (NASDAQ:PETS) has an effective management team, with returns on assets and equity both in excess of 20%.
Your own personal dividend ATM
In fiscal 2012, the company achieved revenue growth of 5.5% year over year. Furthermore, the company’s balance sheet has spots of strength. Diebold Incorporated (NYSE:DBD) has a current ratio of more than 2 times, meaning the company has two times as much short-term assets as short-term liabilities. This allowed Diebold Incorporated (NYSE:DBD) to maintain its impressive dividend streak, and the stock now yields 3.6%.
A package filled with dividends
Small-cap packaging company Greif, Inc. (NYSE:GEF) makes everything from steel drums to water bottles and holds a market value just north of $2.5 billion.
Greif, Inc. (NYSE:GEF) is a global leader in industrial packaging products and services, with a presence in more than 50 countries.
While the ongoing economic troubles in Europe continue to drag on the company, there’s certainly nothing wrong Greif, Inc. (NYSE:GEF)’s dividend payout.
The company’s generous distribution, at $2.52 per share annualized, amounts to a yield greater than 4.5% at recent prices.
The Foolish takeaway
Small-cap stocks often have more growth potential than large caps, and as a result, may have more room to run than their large-cap peers. If you’re an investor who favors receiving income from your stocks, these three companies should be on your watch list. Each of these stocks pays a compelling dividend that handily exceeds the yield on the S&P 500.
Small-cap stocks frequently trade for excessive valuations as compared to the broader market. In the case of these three stocks, they aren’t trading at significantly higher multiples than the broader market. Fortunately, these stocks trade for modest valuations and could provide investors with the unbeatable combination of both dividends and capital gains for years to come.
The article High Dividend Yields Aren’t Just for Large Caps originally appeared on Fool.com is written by Robert Ciura.
Robert Ciura has no position in any stocks mentioned. The Motley Fool recommends Greif. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
