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Investors looking for high dividend yields will likely focus on large-cap stocks, and for good reason. But small-caps can be worthwhile dividend investments as well.Generally speaking, small caps have market capitalizations below $2 billion. Investors typically associate small-cap stocks with growth.These 3 small cap stocks have market caps below $2 billion, meaning they could have impressive growth in their future. But they also reward shareholders in the near-term with high dividend yields.
Small Cap #1: John Wiley & Sons (WLY)
John Wiley stock has a market cap of $2.4 billion. John Wiley & Sons is a publishing and research company whose operations are split into three segments: Research, Publishing, and Solutions.The company offers scientific, technical, medical and scholarly research journals, reference books, databases, clinical decision support tools, laboratory manuals, scientific and education books, and test preparation services. Its services also include learning, development and assessment services for businesses and professionals and online program management services for higher education institutions.John Wiley & Sons reported its fourth quarter (fiscal 2024) earnings results in June. The company announced that its revenues totaled $470 million during the quarter, which represents a decline of 11% versus the prior year’s quarter. Earnings-per-share came in at $1.21 for the quarter, which beat the consensus estimate easily.Earnings-per-share were up by 2% compared to the previous year’s period. John Wiley generated earnings-per-share of $2.78 during fiscal 2024, but it is expected that fiscal 2025 will be significantly stronger. For the current year, management forecasts earnings-per-share of $3.25 to $3.60, which would represent growth deep in the double digits compared to 2024.John Wiley stock has a 3.2% dividend yield, and despite its small size, the company has increased its dividend for 31 consecutive years. This makes it an attractive combination of dividend yield and growth.
Small Cap #2: NW Natural Holding (NWN)
NW Natural was founded in 1859 and has grown from a small utility to a large publicly traded utility today. The utility’s mission is to deliver natural gas to its customers in the Pacific Northwest. The company serves nearly 3 million people through its natural gas, water, and renewable energy businesses. NWN stock trades with a market capitalization of $1.5 billion.Northwest Natural Holding Company (NWN) reported its financial results for the first quarter of 2024, with net income reaching $63.8 million ($1.69 per share), a decrease from $71.7 million ($2.01 per share) in the same period of 2023. Despite this decline, the company saw notable achievements, including adding nearly 15,000 gas and water utility connections in the last 12 months, driven mainly by robust water acquisitions, and providing bill credits totaling nearly $30 million to Oregon gas customers in early 2024.We are forecasting an average growth rate of 7.5% for the next five years as NW Natural pushes through approved pricing increases and continues to acquire customers at low-single-digit rates, as it did with the new Oregon rate case.NW Natural also has its water utilities business that will provide a small amount of growth, but higher earnings will primarily come from customer and pricing growth while the company invests in its water business for longer-term growth. The company’s dividend has been raised for 68 consecutive years, making it a Dividend King.
Small Cap #3: Compass Minerals (CMP)
Compass Minerals International produces and sells salt, and specialty plant nutrition, and chemical products internationally. Its various chloride and salt variants (~55% of sales), such as solar-evaporated salt, are applied as deicers for roadways, human, animal nutrition, and various other industrial uses. CMP has a current market capitalization of $477 million.Its plant nutrition segment (~45% of sales) offers specialty fertilizers in various grades and other agricultural solutions. The company generates nearly $1.2 billion in revenues annually and is based in Overland Park, Kansas.On May 7th, 2024, Compass Minerals posted its fiscal Q2 results for the period ending March 31st, 2024. For the quarter, revenues fell by 11.5% to $364.0 million. This was due to the 5% revenue growth from the plant nutrition segment not being able to offset the 14% decline in salt revenues.We believe the dividend should be covered for now and retain our earnings growth rate estimate to 5% as lower dividend payments should help the company to improve its financial position and potentially pursue growth initiatives.CMP possess competitive advantages that are crucial to its future growth. Along with Cargill and K+S, the companies hold an oligopoly in North America’s salt markets, controlling over 80% of the market share. Also, in the U.K., the company captures 75% of the highway deicing market under multi year contracts from the Winsford, Cheshire Mine – the largest in the country.Additionally, being a bulk commodity, salt has massive transportation costs, raising a strong barrier to entry for any potential competitors. As a result of these advantages and salt being recession-resistant, the company has been able to raise salt prices.CMP pays an annual dividend which currently yields over 10%.More By This Author:3 Dividend Aristocrats Providing High Yields And Dividend Growth
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