3 High-Yielding Small Caps to Get Excited About

Looking for a small-cap stock with a high yield? If so, Innvest REIT Trust Units (TSX:INN.UN), First National Financial Corp. (TSX:FN), and Innergex Renewable Energy Inc. (TSX:INE) are for you.

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The Motley Fool

As Foolish investors know, dividend-paying stocks outperform non-dividend-paying stocks over the long term, and small-cap stocks have the highest growth rates on average. This means that investing in dividend-paying small-cap stocks can be a recipe for huge returns, so let’s take a look at three that you could buy today.

1. Innvest REIT Trust Units: 8% yield

Innvest REIT Trust Units (TSX:INN.UN) owns one of Canada’s largest hotel portfolios, comprising of 110 hotel properties, with approximately 15,000 rooms. It pays a monthly distribution of $0.0333 per share, or $0.3996 per share annually, giving its stock an 8% yield at today’s levels.

Investors should also note that the company has maintained this monthly distribution since January 2012, but its increased amount of funds from operations, including 60.8% year-over-year growth to $26 million in the first half of fiscal 2015, could allow for a significant increase in the very near future.

2. First National Financial Corp.: 7.1% yield

First National Financial Corp. (TSX:FN) is Canada’s largest non-bank lender, offering both commercial and residential mortgage solutions. It pays a monthly dividend of $0.125 per share, or $1.50 per share annually, which gives its stock a 7.1% yield at current levels.

It is also important to note that the company has raised its dividend in each of the last three years, and its strong financial performance in the first half of fiscal 2015, including a 24.6% year-over-year increase in revenue to $251.2 million and a 50.8% year-over-year increase in net income to $42.5 million, could allow this streak to continue in 2015.

3. Innergex Renewable Energy Inc.: 6.1% yield

Innergex Renewable Energy Inc. (TSX:INE) is one of North America’s leading producers of hydro, wind, and solar power. It pays a quarterly dividend of $0.155 per share, or $0.62 per share annually, giving its stock a 6.1% yield at today’s levels.

Investors should also note that the company has raised its dividend for two consecutive years, and its increased amount of free cash flow, including 77.3% year-over-year growth to $85.7 million in its trailing 12-month period ending on June 30, 2015, could allow this streak to continue in 2016. 

Which stock fits your portfolio’s needs?

Innvest Reit, First National Financial, and Innergex Renewable Energy are three of the highest-yielding small-cap stocks in the market today. Foolish investors should strongly consider initiating positions in one of them.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joseph Solitro has no position in any stocks mentioned.

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