As a result, investors piled into dividend-paying stocks. Six-plus years of a near zero interest rate environment sent yield-starved investors hunting for income wherever they can get it. Mounting shareholder pressure for a regular dividend also likely spurred the payout movement, Silverblatt added.
About 30% of companies in the sector made repurchases last year. According to Citigroup, that was the most since 2007. Indeed, small-cap companies bought back roughly $23 billion worth of shares in 2014. So what's behind the move of small-caps becoming the best dividend-paying stocks on the market? Why There Are More Small-Cap Dividend-Paying StocksĪll lot of small companies have decent cash flow, Silverblatt explained. A smattering of sectors, ranging from information technology to telecommunications, make up the rest. Consumer discretionary stocks take the No. Small-cap financials (109) represent the largest dividend-paying sector in the small-cap index. In 2013, 139 companies paid more than they did in 2012. In 2014, 255 companies paid more than in 2013. And 231 have paid dividends for at least five straight years.īased on the current dividend rate, 202 companies will shell out more in dividends this year than they did in 2014, according to S&P. Nineteen more have increased dividends for at least 10 successive years. Eighteen have increased their cash payouts for at least 20 consecutive years. That gives the benchmark an average yield of 2.24%. Some 324 of the 600 SmallCap components currently pay regular cash dividends. "Initiating a dividend represents a broad commitment of future earnings, to which companies need to be very sure of their future cash flow," Howard Silverblatt, Senior Research Analyst at S&P Dow Jones Indices, said in a statement. Now some of the best dividend-paying stocks in the small-cap sector include a health REIT yielding 4.61%, a natural gas company yielding 3.92%, and a regional bank yielding 3.53%. The number of issues in the S&P SmallCap 600 Index presently paying a dividend has jumped 10.2% since the end of 2013. There was a time when small-caps didn't offer any of the market's best dividend-paying stocks, but that's changing. Save my name, email, and website in this browser for the next time I comment. Sign me up for the Money Morning newsletter Your email address will not be published. Or to contact Money Morning Customer Service, click here. © Pinnacle Digest.Comment on This Story Click here to cancel reply. This is especially true for articles that include information on publicly traded companies. Since there is no specific guideline as to how long an article may remain relevant, you should consider that all articles may be irrelevant shortly after they are published. As such, you cannot rely on the accuracy and timeliness of the information provided and should consider many of the articles irrelevant after an extended period of time from the date which it was published.
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