First Published on March 22nd, 2023 by Bob Ciura for SureDividend
The Russell 2000 Index is arguably the world’s best-known benchmark for small-cap U.S. stocks.
Small-cap stocks have historically outperformed their larger counterparts.
Accordingly, the Russell 2000 Index can be an intriguing place to look for new investment opportunities.
You can download your free Excel list of Russell 2000 stocks, along with relevant financial metrics like dividend yields and P/E ratios, by clicking on the link below:
We typically rank stocks based on their five-year expected annual returns, as stated in the Sure Analysis Research Database.
But for investors primarily interested in income, it is also useful to rank small-cap stocks according to their dividend yields.
This article will rank the 20 highest-yielding small cap stocks in our coverage universe (excluding REITs, MLPs, BDCs, and royalty trusts).
Table of Contents
- •Why Invest In Small-Cap Stocks?
- •High Yield Small Cap #20: Community Trust Bancorp (CTBI)
- •High Yield Small Cap #19: Auburn National Bancorp (AUBN)
- •High Yield Small Cap #18: Ennis Inc. (EBF)
- •High Yield Small Cap #17: Kaiser Aluminum (KALU)
- •High Yield Small Cap #16: Ethan Allen Interiors (ETD)
- •High Yield Small Cap #15: HNI Corp. (HNI)
- •High-Yield Small Cap #14: B&G Foods (BGS)
- •High-Yield Small Cap #13: Ames National Corp. (ATLO)
- •High-Yield Small Cap #12: Compass Diversified Holdings (CODI)
- •High-Yield Small Cap #11: First of Long Island Corp. (FLIC)
- •High-Yield Small Cap #10: Universal Corporation (UVV)
- •High-Yield Small Cap #9: Washington Trust Bancorp (WASH)
- •High-Yield Small Cap #8: Northwest Bancshares Inc. (NWBI)
- •High-Yield Small Cap #7: Medifast Inc. (MED)
- •High-Yield Small Cap #6: PetMed Express (PETS)
- •High-Yield Small Cap #5: Telephone and Data Systems (TDS)
- •High-Yield Small Cap #4: Fortitude Gold Corp. (FTCO)
- •High-Yield Small Cap #3: Big Lots (BIG)
- •High-Yield Small Cap #2: Camping World Holdings (CWH)
- •High-Yield Small Cap #1: Via Renewables (VIA)
Why Invest In Small-Cap Stocks?
The Russell 2000 Index contains the domestic U.S. stocks that rank 1,001 through 3,000 by descending market capitalization.
The Russell 2000 is an excellent benchmark for small-cap stocks. The average market capitalization within the Russell 2000 is ~currently $2.9 billion.
Why does this matter? There are a number of advantages to investing in small-cap stocks, which we explore in the following video:
Small-cap stocks have historically outperformed large-cap stocks for two reasons.
Firstly, small-cap stocks tend to grow more quickly than their larger counterparts. There is simply less competition and more room to grow when your market capitalization is, say, $1 billion when compared to mega-cap stocks with market caps above $200 billion.
Secondly, many small-cap securities are outside the investment universes of some larger institutional investment managers. This creates less demand for shares, which reduces their prices and creates better buying opportunities.
For this reason, there are typically more mis-priced investment opportunities in a small-cap index like the Russell 2000 than a large-cap stock index like the S&P 500.
The following section ranks the 20 highest-yielding small-cap stocks in the U.S. that are covered in the Sure Analysis Research Database. The stocks are ranked in order of lowest dividend yield to highest.
High Yield Small Cap #20: Community Trust Bancorp (CTBI)
- •Dividend Yield: 4.4%
Community Trust Bancorp is a regional bank with 84 branch locations in 35 counties in Kentucky, Tennessee, and West Virginia. It is Kentucky’s second-largest bank holding company, with a $5.5 billion balance sheet. It has raised its dividend for 42 consecutive years.
The key competitive advantage of Community Trust Bancorp is its disciplined and conservative management. The bank has reported average net loan charge-offs of only 0.03% in the last four quarters.
Thanks to the recent sell-off, the stock is offering a nearly 10-year high dividend yield of 4.5%. Given its solid payout ratio of 39% and its defensive business model, the company is likely to continue raising its dividend for many more years.
Moreover, Community Trust Bancorp has grown its earnings per share at a 6.4% average annual rate over the last decade and at a 9.5% average annual rate over the last five years. The economy has recovered from the pandemic, and the Fed has raised interest rates aggressively in recent quarters. Higher interest rates have enhanced the net interest margin of the bank, but they have caused deceleration of the economy, as intended.
Click here to download our most recent Sure Analysis report on Community Trust Bancorp (CTBI) (preview of page 1 of 3 shown below):
High Yield Small Cap #19: Auburn National Bancorporation (AUBN)
- •Dividend Yield: 4.5%
Auburn National Bancorporation, Inc. is a bank holding company with total assets of approximately $1.0 billion as of December 31, 2022. Through its principal subsidiary, AuburnBank, the company provides a full range of banking services to commercial and retail customers.
AuburnBank is community oriented and focuses primarily on offering commercial and consumer loan and deposit services to individuals, and small and middle market businesses in East Alabama, including Lee County and surrounding areas. The Bank has 8 offices and 13 ATM locations throughout the communities it serves. The company was founded in 1907 and has 152 employees.
On January 30th, 2023, Auburn National Bancorporation, Inc. released its fourth quarter 2022 results for the period ending December 31st, 2022. For the quarter, the company reported net earnings of $4.5 million compared to $1.9 million for the fourth quarter of 2021. Reported earnings per diluted share for the same periods were $1.27 and $0.53, an increase of 140%. For the full year 2022, the company reported record net earnings of $10.3 million, or $2.95 per share, compared to $8.0 million, or $2.27 per share, for 2021.
The company’s fourth quarter results reflect strong growth in total revenue driven by increased net interest income(“NII”), expanding margin and a couple of notable non-routine items. The 23% increase in net interest income on a tax-equivalent basis, compared to the fourth quarter of 2021, was primarily due to improvement in net interest margin. The net interest margin (tax-equivalent) was 3.27% in the fourth quarter of 2022 compared to 2.45% in the prior year. Auburn National reported improved loan growth during the fourth quarter of 2022 as loans increased $34.4 million or 8% year-over-year.
Click here to download our most recent Sure Analysis report on AUBN (preview of page 1 of 3 shown below):
High Yield Small Cap #18: Ennis Inc. (EBF)
- •Dividend Yield: 4.6%
Ennis is a company in the printing and business documents sector. The company provides commercial printing services, along with a variety of complementary products such as folders, forms, tags, labels, and so on. Investors might be inclined to dismiss this as a dying business. And, indeed, print volumes have been declining. However, total value has held up thanks to rising prices along with offering additional services and add-ons.
Furthermore, Ennis has been an aggressive acquirer, picking up numerous other printing businesses over the past five years. In 2021, the company bought AmeriPrint, which is involved in barcodes. Last year, Ennis acquired School Photo Marketing, which is a leader in school and sports photography. As other players seek to exit the printing industry, Ennis should have more opportunities to keep making beneficial acquisitions.
On December 19th, 2022, Ennis reported its results for its third quarter for the period ending November 30th, 2022. In it, Ennis showed strong results on both the top and bottom line. Revenues rose 7% to $110 million. Meanwhile, earnings per share surged from $0.29 in the same period of 2021 to $0.44 this quarter, marking a 50% increase year-over-year. Ennis achieved the strong profit growth thanks to a 200 basis points jump in its gross margin.
Click here to download our most recent Sure Analysis report on Ennis (preview of page 1 of 3 shown below):
High Yield Small Cap #17: Kaiser Aluminum (KALU)
- •Dividend Yield: 4.6%
Kaiser Aluminum Corporation is a leading producer of semi-fabricated aluminum products. Manufacturers and major suppliers around the world look to Kaiser to deliver highly engineered solutions for their most demanding aerospace, packaging, automotive and industrial applications.
Specifically, Kaiser operates 13 production facilities across North America. Collectively, these facilities produce an impressive range of value-added plate, sheet, coil, and extruded products. This latter category includes extruded shapes as well as rod, bar, tube, forged stock, and wire products. Kaiser generated $3.4 billion in revenues last year.
Source: Investor Presentation
On February 22nd, 2023, Kaiser Aluminum reported its Q4-2022 and full-year results for the period ending December 31st, 2022. Net sales came in at $776 million, down 3.7% year-over-year, reflecting a 9% decrease in shipments and a 6% increase in average selling price per pound.
Value-added revenue (Net Sales – hedge costs of alloyed metal) grew 13% to $356 million, primarily driven by higher demand across all business segments. Specifically, the company’s aerospace/high strength, packaging applications, general engineering applications, and automotive extrusions segments saw their value-added revenues rise 25%, 2%, 26%, and 10%, respectively.
Net income was $26 million, or $1.66 on a per-share basis, compared to a net income of $2 million, or $0.11 on a per share basis, respectively, in the prior year period. Excluding the impact of non-run-rate items, adjusted net loss was $7 million or $0.45 on a per-share basis, compared to net income of $5 million and $0.33 on a per-share basis, respectively.
Click here to download our most recent Sure Analysis report on KALU (preview of page 1 of 3 shown below):
High Yield Small Cap #16: Ethan Allen Interiors (ETD)
- •Dividend Yield: 4.6%
Ethan Allen Interiors is a vertically integrated interior design company that manufactures and sells retail home furnishings, such as beds, dressers, chairs, lighting, mattresses, and decorative pieces. The company sells online and through its network of approximately 302 design centers, where 161 are independently owned and 141 are company operated.
In 2022, 16% of net sales came from the Wholesale segment, which includes sales from independently owned stores, while the Retail segment generated 84% sales. We believe the business is positioned to continue to benefit from long-term work from home trends. Additionally, the business follows a build-to-order business model, where orders are customized to the customer’s preference.
In late January, Ethan Allen reported (1/25/23) financial results for the second quarter of fiscal 2023. Retail sales and wholesale sales decreased -4.4% and -8.3%, respectively, over the prior year’s quarter but gross margin expanded from 58.8% to 61.0% thanks to material price hikes.
As a result, adjusted earnings-per-share grew 16%, from $0.95 to $1.10, and exceeded the analysts’ consensus by $0.21. The company has exceeded the analysts’ estimates by a wide margin for six consecutive quarters.
Click here to download our most recent Sure Analysis report on Ethan Allen (preview of page 1 of 3 shown below):
High Yield Small Cap #15: HNI Corporation (HNI)
- •Dividend Yield: 4.8%
HNI Corporation was founded in 1944 as an office furniture manufacturer. The company continues to be a leader in that space as it has expanded its portfolio of brands and added a full array of hearth products including fireplaces, inserts and stoves. HNI generates about $2.1 billion in annual revenues.
The company recently announced the acquisition of Kimball International for approximately $485 million, with a total
enterprise value of approximately $531 million.
Source: Investor Presentation
On February 23rd, 2023, HNI reported fourth quarter and full year results for the period ending December 31st, 2022. Revenue fell 5.6% to $568.9 million, which beat estimates by $9.7 million. Adjusted earnings-per-share of $0.63 compared favorably to $0.43 in the prior year and was $0.15 more than expected.
For 2022, revenue grew 8.1% to $2.36 billion while adjusted earnings-per-share of $2.20 compared favorably to $1.63 in the prior year. Organic sales fell 1.2% for the quarter, but grew 8.5% for the year.
For the quarter, revenue for the Workplace Furnishings decreased 10.8% to $351.2 million, but this was mostly due to a sale of an asset. Organic sales for the segment were lower by 3.3% for the quarter, but higher by 7.3% for 2022. Residential Building Products generated revenue of $217.7 million, a 4.2% increase from the prior year.
Results were again aided by acquisitions, but organic growth totaled 2.3% for Q4 and 10.9% for the year, showing that HNI’s products remain in high demand.
Click here to download our most recent Sure Analysis report on HNI (preview of page 1 of 3 shown below):
High Yield Small Cap #14: B&G Foods (BGS)
- •Dividend Yield: 5.1%
B&G Foods was created in the late 1990s with the initial purpose of acquiring Bloch & Guggenheimer, who sold pickles, relish, and condiments. Bloch itself was founded in 1889. The common stock we know today under the ticker BGS has traded on the NYSE since 2007. B&G Foods has a market capitalization of $992 million.
Some of the company’s well-known brands include Green Giant, Ortega, Cream of Wheat, Mrs. Dash, and Back to Nature, with over 50 brands in total. The company’s latest major acquisition was Crisco in early December 2020. The company’s product portfolio focuses on shelf-stable, frozen and snack brands.
The company operates in the United States, Canada, and Puerto Rico. While the company possesses some major brands, such as Green Giant, Ortega, and Crisco, many of their brands can be considered second-tier.
B&G Foods reported fourth quarter and full year 2022 results on February 28th, 2023. For the quarter, the company recorded net sales of $623 million, a 9% increase compared to Q4 2021, driven by price increases and improved product mix. Adjusted net income equaled $28.9 million or $0.40 per share compared to $26.3 million or $0.39 per share in Q4 2021.
For the full year, B&G Foods saw adjusted diluted EPS decrease by nearly 43% compared to 2021, to $1.08. This decrease was the result of input cost inflation and supply chain disruptions, as well as a higher share count. B&G Foods initiated 2023 guidance and expects $2.13 billion to $2.17 billion in net sales and adjusted EPS between $0.95 to $1.15. The lower expected adjusted EPS also reflects the recent sale of the Back to Nature business.
Click here to download our most recent Sure Analysis report on BGS (preview of page 1 of 3 shown below):
High Yield Small Cap #13: Ames National Corporation (ATLO)
- •Dividend Yield: 5.1%
Ames National Corporation is a US-based bank holding company that owns and operates five bank subsidiaries in central Iowa. The subsidiaries consist of two national banks (First National Bank, Ames, Iowa and State Bank & Trust Co.) and three state-chartered banks (Boone Bank & Trust Co., Reliance State Bank, and United Bank & Trust NA). The company provides a range of banking services to individuals, businesses, and municipal entities in Iowa.
Lending activities consist primarily of short-term and medium-term commercial and agricultural real estate loans, residential real estate loans, agricultural and other business-related loans. As of December 31, 2022, total assets were $2.13 billion.
On January 20th, 2023, Ames National Corporation released fourth quarter 2022 results for the period ending December 31st, 2022. For the quarter, the company reported a net income of $4.4 million, or $0.49 per share, compared to $5.3 million, or $0.58 per share, earned in the fourth quarter of 2021.
For the full year ended December 31, 2022, net income for Ames National Corp. totaled $19.3 million or $2.14 per share, compared to $23.9 million or $2.62 per share earned in 2021. The decrease in earnings for the last three months and year ended was primarily the result of higher interest expense on deposits and a reduction in income recognition from Paycheck Protection Program (“PPP”) fees.
However, this was partially offset by a rise in interest income from loans and taxable securities primarily driven by growth in the loan and investment portfolios. Management is forecasting earnings for the fiscal year 2023 in the range of $1.75 to $1.85 per share compared to $2.14 per share earned last year.
Click here to download our most recent Sure Analysis report on ATLO (preview of page 1 of 3 shown below):
High Yield Small Cap #12: Compass Diversified Holdings (CODI)
- •Dividend Yield: 5.4%
Compass Diversified Holdings is a private equity firm that specializes in acquisition in the middle market. The middle market is loosely defined as businesses with owner earnings between $10 million and $500 million. Compass Diversified Holdings has about 10 different subsidiaries at most times, but there are regular changes in the portfolio.
Compass Diversified Holdings reported its most recent quarterly earnings results in November. The company announced that its revenues totaled $600 million during the quarter, up 22% year-over-year. The company beat the top line estimate easily, by $50 million. Compass Diversified was able to generate adjusted EBITDA of $98 million during the quarter, up 27% year over year.
Compass Diversified’s growth strategy is focused on generating $1 billion of EBITDA in 5-7 years from now. It has three primary growth drivers to achieve that goal.
First, it plans to continue transforming and improving the businesses within its existing portfolio to drive increasing EBITDA organically. Second, it plans to continue acquiring new businesses that fit within its current platforms, with a continued focus on premium, highly differentiated brands. Finally, it is taking the beginning steps towards launching a more defensive healthcare vertical.
Click here to download our most recent Sure Analysis report on CODI (preview of page 1 of 3 shown below):
High Yield Small Cap #11: First of Long Island Corp. (FLIC)
- •Dividend Yield: 5.7%
The First of Long Island Corporation is the holding company for The First National Bank of Long Island. This small-sized bank provides a range of financial services to consumers and small to medium-sized businesses. Its offerings include business loans, consumer loans, mortgages, savings accounts, etc.
FLIC operates over 40 branches in two Long Island counties and several NYC burrows, including Queens, Brooklyn, and Manhattan.
Source: Investor Presentation
FLIC reported its most recent quarterly results on January 26. The company reported revenues of $31 million for the third quarter, which was 0.2% less than the revenues that the company generated during the previous year’s period. FLIC’s revenues missed what analysts had forecasted for the quarter by 5%. The revenue decrease can be explained by the fact that the bank’s net interest margin declined year over year, from 2.86% during the previous year’s quarter to 2.74%. This made FLIC’s net interest income decline slightly.
FLIC’s earnings-per-share totaled $0.44 during the fourth quarter, which was up 16% year over year. This solid earnings-per-share performance was mostly driven margin expansion, although buybacks also resulted in growth tailwinds. During 2021, FLIC generated earnings-per-share of $1.81, which was a new record result for the company, and the result was the same for 2022.
Click here to download our most recent Sure Analysis report on FLIC (preview of page 1 of 3 shown below):
High Yield Small Cap #10: Universal Corporation (UVV)
- •Dividend Yield: 6.1%
Universal Corporation is a tobacco stock. It is the world’s largest leaf tobacco exporter and importer. The company is the wholesale purchaser and processor of tobacco that operates as an intermediary between tobacco farms and the companies that manufacture cigarettes, pipe tobacco, and cigars. Universal also has an ingredients business that is separate from the core leaf segment.
Universal Corporation reported its second quarter (fiscal 2023) earnings results in November. The company generated
revenues of $1.1 billion during the quarter, which was 34% more than the revenues that Universal Corporation generated during the previous year’s period. Management explains that revenues were up due to a stronger product mix primarily.
Universal’s gross margin was down slightly compared to the previous year’s period, but that headwind was offset by higher revenues, which is why operating income still was up year over year. Universal’s adjusted earnings-per-share totaled $1.13 during the quarter, which was up on a year-over-year basis, thanks to higher operating income.
As the leader in a declining industry, we do not expect the company to deliver strong growth in the future. The company’s earnings-per-share could still rise over the next couple of years, however. Universal’s shares trade at a moderate valuation based on the earnings and cash flows that the company generates.
Universal also does not need to invest large amounts of money into its business, which gives it the ability to utilize a substantial amount of its free cash flows for share repurchases and dividends.
With a dividend payout of ~79% for the current fiscal year, we view Universal’s dividend as moderately safe, with the caveat that the company faces headwinds due to the steady decline of the tobacco industry.
Click here to download our most recent Sure Analysis report on Universal (preview of page 1 of 3 shown below):
High Yield Small Cap #9: Washington Trust Bancorp (WASH)
- •Dividend Yield: 6.1%
Washington Trust Bancorp, Inc. operates as a holding company that has nearly $6 billion assets. The company also provides banking services such as savings accounts, certificates of deposit and money market accounts.
Washington Trust also offers loans for residential, commercial, consumer and construction customers as well as reverse mortgages. Lastly, the company also offers wealth management services, including asset management, financial planning and advisory services. Washington Trust has 22 branches located in Rhode Island and one branch in Connecticut.
On December 15th, 2022, Washington Trust increased its quarterly dividend 3.7% to $0.56. On January 25th, 2023, Washington Trust reported fourth quarter and full year earnings results for the period ending December 31st, 2022. For the quarter, revenue declined 5% to $55.13 million. GAAP earnings-per-share of $0.95 compared unfavorably to $1.15 in the prior year. For the year, earnings-per-share equaled $4.11 compared to $4.39 in the prior year.
Total loans grew 5% to a company record $5.1 billion. The company had a provision for credit losses of $800 thousand. Deposits increased 1% to $4.7 billion. Return on average equity and average assets was 14.96% and 1.01%, respectively, with both lower on a sequential basis.
Wealth management revenues of $8.6 million were down 18% and assets under management totaled $5.3 billion. Net interest income improved 9.5% year-over-year to $41.3 million while the net interest margin contracted 6 basis points to 2.65%. Following earnings, we continue to expect that Washington Trust will earn $4.68 per share in 2023.
Click here to download our most recent Sure Analysis report on WASH (preview of page 1 of 3 shown below):
High Yield Small Cap #8: Northwest Bancshares (NWBI)
- •Dividend Yield: 6.1%
Northwest Bancshares is a bank holding company that offers full-service financial institutions providing a complete line of personal and business banking products, including employee benefits, investment management services, and trust.
Northwest Bank is the leading subsidiary of Northwest Bancshares, and it operates 162 branches in central and western Pennsylvania, western New York, eastern Ohio, and Indiana.
On January 23th, 2022, the company announced the fourth quarter and full year results for the fiscal year (FY) 2022. Total interest income was up 15.3% for the quarter, from $30.1 million to $34.6 million compared to the fourth quarter of FY2021. This increase in net interest income is due to both the increase in market interest rates and the change in the company interest-earning asset mix.
Noninterest income grew 3% to $27.9 million for the quarter from $27.0 million in the fourth quarter of 2021. This increase was primarily the result of gains from the sale of branch buildings associated with the previously announced branch consolidations and improvements in other fee income. For the full year, net income is down 13.4% compared to the full year of 2021.
Click here to download our most recent Sure Analysis report on NWBI (preview of page 1 of 3 shown below):
High Yield Small Cap #7: Medifast Inc. (MED)
- •Dividend Yield: 4.1%
Medifast is a company that primarily manufactures and distributes weight loss, weight management, and other consumable health and nutrition products in the US.
The company offers a wide variety of bars, cereal, drinks, oatmeal, smoothies, and more under three brand banners: OPTAVIA, Optimal Health by Take Shape for Life, and Flavors of Home. Medifast sells its products directly to consumers via its digital properties and through retail points of distribution through its vendors.
The company was founded in 1980 and generates about $1.6 billion in annual revenue.
Source: Investor Presentation
Medifast operates in a very competitive space, with numerous entrants and competitive advantages being derived mostly from branding. Given that consumers may struggle to understand the differences in various nutritional products – if there are any material differences – Medifast employs a commissioned sales force to move its products.
The current payout ratio is under 50% of earnings, and given the company has no interest-bearing debt and continues to post high levels of earnings, we think the payout is safe.
Click here to download our most recent Sure Analysis report on Medifast (preview of page 1 of 3 shown below):
High Yield Small Cap #6: PetMed Express (PETS)
- •Dividend Yield: 6.9%
PetMed Express is a pet pharmacy business that is based in the US. The company provides prescription and non-prescription therapies and medications, health products, vitamins and supplements, food, and other products for dogs, cats, and horses. In addition, it sells hard goods such as beds, crates, and other related products. The company was founded in 1996, generates about $270 million in annual revenue, and trades with a market cap of $374 million.
On February 6th, 2023, PetMed Express reported third-quarter results for the Fiscal Year 2023. The company fiscal year ends on the last day of March every year. Sales were down (2.9)% for the quarter compared to the third quarter of FY2022. For the quarter, the company generated sales of $58.9 million, lower than the total sales of $60.7 million in 3Q2022.
Net income was a loss of $19 thousands, or $0.0 diluted per share, for the quarter, compared to net income of $4.3 million, or $0.21 diluted per share, for 3Q2022. The management team was pleased to see the first year over year increase in customers for PetMeds in the last ten quarters.
For the nine months, sales decreased (6.3)% year-over-year. Net income also saw a decreased of (69.5)%.
Click here to download our most recent Sure Analysis report on PetMed Express (preview of page 1 of 3 shown below):
High Yield Small Cap #5: Telephone and Data Systems (TDS)
- •Dividend Yield: 7.2%
Telephone & Data Systems is a telecommunications company that provides customers with cellular and landline services, wireless products, cable, broadband, and voice services across the United States. The company’s Cellular Division accounts for more than 75% of total operating revenue. TDS started in 1969 as a collection of 10 rural telephone companies.
The company has increased its dividend for 49 consecutive years.
Source: Investor Presentation
TDS declared a 2.8% dividend increase to $0.185 quarterly on February 16th, 2023. In the most recent quarter, total operating revenues were $1.357 billion, down 1% compared to the same period one year ago. Net income was $(43) million, down from last year’s $14 million.
Diluted earnings per share of $(0.38) also compared unfavorably to the $0.11 earned one year ago. Higher postpaid average revenue per user (ARPU) at US Cellular drove service revenue growth since customers chose higher-value plans. Postpaid ARPU of $50.60 was a 4.1% year-over-year increase.
Total broadband connections increased 4% year-over-year to 510,000 connections and residential revenue per connection grew 3.5% to $59.91. During the quarter, TDS repurchased nearly 1.16 million of its common stock for $14 million. Management provided 2023 guidance and expect service revenues at U.S. Cellular of around $3.1 billion. Total expected operating revenues for TDS is around $1.045 billion.
Click here to download our most recent Sure Analysis report on TDS (preview of page 1 of 3 shown below):
High Yield Small Cap #4: Fortitude Gold Corporation (FTCO)
- •Dividend Yield: 7.3%
Fortitude Gold is a gold producer, which is based in the U.S., generates 99% of its revenue from gold and targets projects with low operating costs, high returns on capital and wide margins.
Its Nevada Mining Unit consists of five high-grade gold properties located in the Walker Lane Mineral Belt. Nevada is one of the friendliest jurisdictions to miners in the world.
Fortitude Gold has grown its production at a fast pace in each of the last two years, primarily thanks to the major growth project of Isabella Pearl Mine.
Source: Investor Presentation
As shown in the above chart, the reserves of Isabella Pearl Mine will last until approximately 2025 and then they will probably be replenished by the additional reserves of the Golden Mile Project.
The chart depicts essentially flat production in the upcoming years. As a result, the earnings of Fortitude Gold will be essentially determined by the prevailing price of gold.
Income investors should avoid gold stocks in principle due to the high cyclicality that results from the swings of the price of gold.
On the other hand, Fortitude Gold has some attractive features for dividend investors. It is offering a monthly dividend of $0.04, which corresponds to an annualized dividend yield of 7.3%.
Click here to download our most recent Sure Analysis report on FTCO (preview of page 1 of 3 shown below):
High Yield Small Cap #3: Big Lots (BIG)
- •Dividend Yield: 10.8%
Big Lots, Inc. is a home discount retailer with a focus on closeouts and low prices. With $6 billion in sales and a market cap of around $468 million, this S&P 600 component can trace its history to 1967, although its regular dividend payments only started in 2014. The company reported Q3 2022 earnings on December 1st, 2022, and announced a quarterly dividend of $0.30 per share, in line with previous.
With Q3 earnings at a net loss of $3.56 per share alongside the previous quarters $2.91 loss per share, this half years results do not cover the dividends that have been declared and paid to date.
Additionally, the losses suffered represent a significant downturn compared to both the 2021 results and the company’s initial guidance. This result includes a significant after-tax charge of $0.56 per share associated with store asset impairment charges. Excluding these charges, the company reported a loss of $2.99 per share.
Net sales decreased by 9.8% year over year. The third quarter marks another quarter in which the company met the challenges of a tough environment head on, with the company’s sales and margins being in line with their latest guidance, and importantly, with year-over-year inventories shrinking.
Click here to download our most recent Sure Analysis report on BIG (preview of page 1 of 3 shown below):
High Yield Small Cap #2: Camping World Holdings (CWH)
- •Dividend Yield: 11.9%
Camping World is a retailer of recreational vehicles, related products, and various RV services. It operates in two segments: Good Sam Services and Plans, and RV and Outdoor Retail. Through these segments, the company offers a deep and wide portfolio of services, protection plans, and other resources related to RVs.
In addition it offers products like vehicle service contracts, roadside assistance, insurance programs, magazines, and of course, new and used RV vehicle sales. Camping World has a network of dealers and retail locations in 40 states in the U.S.
The company generates about $7 billion in annual revenue, and traces its roots to 1966.
The company boasts over 2 million members in its Good Sam business, which provide high-margin, recurring revenue to help compliment its more cyclical RV business.
On February 21st, 2023, Camping World Holdings reported its Q4 and full-year results. For the quarter, revenues came in at $1.3 billion, 7.1% lower year-over-year. The decline compared to Q3-2021 was driven by lower sales across all of the company’s RV and Outdoor Retail divisions.
Specifically, new vehicle revenues declined 13.1%, used vehicle revenues declined 4.8%, other products and services revenues declined 0.4%, and finance and insurance revenues declined 4.6%. Lower revenues from vehicles were driven by a 6.2% decline in total unit sales and a 4.5% and 1.7% decline in the average selling price of new and used vehicles, respectively.
A 2.5% increase in the company’s Good Sam Services and Plans segment could not meaningfully offset these declines. Net loss for the quarter was $57.2 million or ($0.79) per share, compared to a net income of $116.5 million or $0.54 per share last year.
Click here to download our most recent Sure Analysis report on CWH (preview of page 1 of 3 shown below):
High Yield Small Cap #1: Via Renewables (VIA)
- •Dividend Yield: 13.7%
Via Renewables is a small, Houston-based retail energy services company with a long-standing history dating back to 1999. Operating across 19 states and the District of Columbia, it serves both residential and commercial customers through its unique asset-light model. This approach enables the company to offer competitive prices as they source power and natural gas to meet the demands of their customers.
However, VIA Renewables is not your typical retail energy company as it doesn’t produce energy by itself. Instead, it manages risk and trades energy, which can result in its results being extremely volatile.
In early November, Via Renewables reported (11/2/22) financial results for the third quarter of fiscal 2022. It switched from earnings of $34.7 million in the prior year’s quarter to a net loss of -$4.9 million, mostly due to hefty losses in its price hedges. Adjusted EBITDA decreased -31%, mostly due to higher spending on customer acquisition and a tax benefit in last year’s period. On the bright side, the company expects to benefit in the current environment of high utility rates, which render Via Renewables more competitive than its larger peers.
Click here to download our most recent Sure Analysis report on VIA (preview of page 1 of 3 shown below):
Final Thoughts
High yield dividend stocks have obvious appeal to income investors. The S&P 500 Index yields just ~1.7% right now on average, making high yield stocks even more attractive by comparison.
In addition, small-cap stocks could have stronger growth potential than larger competitors in their respective sectors.
Of course, investors should always do their research before buying individual stocks.
That said, the 20 stocks in this list have yields at least double the S&P 500 Index average, going all the way up to 13%. As a result, income investors may find these 20 dividend stocks attractive.
This article was first published by Bob Ciura for Sure Dividend
Sure dividend helps individual investors build high-quality dividend growth portfolios for the long run. The goal is financial freedom through an investment portfolio that pays rising dividend income over time. To this end, Sure Dividend provides a great deal of free information.
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