Small-cap stocks are currently being offered at a discount, with select names available for just 8.8 times earnings and 83% of book value. This is a rare opportunity as large-cap stocks typically do not sell at such low prices. By focusing on small-cap stocks, investors can potentially earn payouts between 7.3% and 13.8%.
Traditionally, smaller firms trade at a premium compared to their large-cap counterparts due to their significant growth potential. However, at present, small-cap stocks are more affordable based on various valuation measures.
Here are five small-cap stocks that are offering dividends averaging a lucrative 10.7%:
1. Buckle (BKE)
– Dividend Yield: 10.3%
– Buckle is a fashion retailer with over 440 stores across 42 states. Despite being a brick-and-mortar retail stock, it has shown impressive growth, tripling in value over the past five years. The company has managed to maintain a generous yield and is expected to rebound financially in the coming years.
2. DHT Holdings (DHT)
– Dividend Yield: 8.5%
– DHT Holdings is a crude oil tanker owner and operator with a fleet of Very Large Crude Carriers. While the stock offers a high yield, investors should note that the dividend is variable based on profits and has accounted for 100% of diluted earnings per share.
3. Two Harbors Investment (TWO)
– Dividend Yield: 13.8%
– Two Harbors Investment is a mortgage REIT that deals in mortgage servicing rights and other financial assets. The company’s dividend appears well-covered, but its performance is heavily influenced by Federal Reserve decisions.
4. CION Investment (CION)
– Dividend Yield: 13.7%
– CION Investment is a business development company that provides financing to small- and mid-sized businesses. The company pays a sizeable quarterly dividend and has shown consistent performance since its listing in 2021.
5. Royce Value Trust (RVT)
– Distribution Rate: 7.3%
– Royce Value Trust is a closed-end fund that focuses on small-cap stocks with attractive valuations. The fund currently trades at a significant discount to its net asset value, providing investors with an opportunity to access small-cap investments at a lower price.
Overall, small-cap stocks are currently offering attractive dividends, making them a compelling option for investors looking to capitalize on potential growth opportunities.