Often when it comes to income investing, dividend stock buyers gravitate towards big companies known as large-cap stocks, which have market caps above $10 billion. This is understandable given they tend to have stable businesses with more consistent cash flow.However, income investors should not ignore small-cap stocks. Small-caps have market capitalizations below $2 billion.
B&G Foods (BGS)
B&G Foods, Inc. is a consumer staples company with operations in the U.S., Canada, and Puerto Rico. Some of the company’s well-known brands include Green Giant, Cream of Wheat, Cary’s, Ortega, Mrs. Dash, and Maple Grove Farms, with 50+ brands in total. On December 1st, 2020, B&G Foods completed the acquisition of Crisco. The company’s product portfolio focuses on shelf-stable, frozen and snack brands. B&G Foods has a market capitalization of $600 million.B&G Foods reported second-quarter 2023 results on August 3rd, 2023, for the period ending July 1stt, 2023. For the quarter, the company recorded net sales of $470 million, a 2% decrease compared to Q2 2022, mostly as a result of the Back to Nature divestiture. Adjusted net income equaled $10.7 million or $0.15 per share compared to $5.1 million or $0.07 per share in Q2 2022. B&G Foods revised its 2023 guidance and now expects $2.11 billion to $2.13 billion (compared to $2.13 billion to $2.17 billion previously) in net sales and adjusted EPS between $0.95 to $1.15.B&G Foods’ growth strategy over the past decade has been to acquire food brands in debt-financed deals, then scale those brands and raise prices over time. This process worked well for the company in the years after the Great Recession, as low interest rates allowed for cheap debt. B&G generated strong earnings growth during that time, but lately EPS has faltered as a result of high inflation on the company’s costs.BGS stock currently yields 9%.
Enterprise Bancorp (EBTC)
Enterprise Bancorp Inc. was formed in 1996 as the parent holding company of Enterprise Bank and Trust Company, referred to as Enterprise Bank. Enterprise has 27 full-service branches in the North Central region of Massachusetts and Southern New Hampshire. The company’s primary business operation is gathering deposits from the general public and investing in commercial loans and investment securities.The Bank offers commercial, residential and consumer loan products, cash management services, electronic banking options, insurance services, as well as wealth management. About half of the company’s loan portfolio is in commercial real estate and about a third is in commercial construction loans.Other subsidiaries under Enterprise Bancorp are Enterprise Investment Services and Enterprise Insurance Services, which cater to the bank’s target market of business customers. Enterprise Bancorp is an exceptionally managed bank, which has remained profitable in every single quarter since its formation.In the 2023 third quarter, revenue of $43 million declined 3% year-over-year. Earnings-per-share came to $0.79. Net interest margin (non-GAAP) was 3.46%. Total loans increased 2% compared to June 30, 2023, and 9% compared to September 30, 2022. Total deposits decreased 0.4% compared to June 30, 2023, and 2% compared to September 30, 2022.Moreover, thanks to its strong business outlook, Enterprise has raised its dividend by 12% this year. The company has increased its dividend for 29 consecutive years and yields nearly 3%.
Universal Corporation (UVV)
Universal Corporation is the world’s largest leaf tobacco exporter and importer. The company is the wholesale purchaser and processor of tobacco that operates between farms and the companies that manufacture cigarettes, pipe tobacco, and cigars. Universal Corporation was founded in 1886 and is headquartered in Richmond, Virginia. With 53 years of dividend increases, Universal Corporation is a Dividend King.Universal Corporation reported its first quarter (fiscal 2023) earnings results in August. The company generated revenues of $520 million during the quarter, which was 21% 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. This headwind was not completely offset by higher revenues, which is why operating income was down year over year.Universal’s adjusted loss-per-share totaled $0.08 during the quarter. The company has not provided guidance for the current fiscal year, but comments indicate that demand is healthy, particularly in the leaf tobacco market.UVV stock yields 7%.More By This Author:Achieve More Income With These 3 Dividend Growth Stocks
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