As savvy 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. Combining these two factors by investing in dividend-paying small caps can be a recipe for huge returns, so let’s take a quick look at three from three different industries, so you can determine which would be the best fit for your portfolio.
1. Ensign Energy Services Inc.
Ensign Energy Services Inc. (TSX:ESI) is one of the world’s leading land-based drilling and well-servicing contractors. It pays a quarterly dividend of $0.12 per share, or $0.48 per share annually, giving its stock a 6.6% yield at today’s levels.
Investors must also note that Ensign has raised its annual dividend payment for 20 consecutive years, but I think its decreased amount of funds from operations, including a 31.2% year-over-year decline to $247.37 million in the first nine months of fiscal 2015, may cause it to simply maintain its current rate in 2016.
2. Extendicare Inc.
Extendicare Inc. (TSX:EXE) is the second-largest operator of senior housing and care facilities in Canada with 112 owned and managed homes. It pays a monthly dividend of $0.04 per share, or $0.48 per share annually, giving its stock a 5.05% yield at today’s levels.
Investors should also note that Extendicare has maintained this monthly rate since May 2013, but I think its increased amount of funds from continuing operations, including an adjusted 47% year-over-year increase to $34.9 million in the first nine months of fiscal 2015, could allow for a significant increase in 2016.
3. Evertz Technologies Limited
Evertz Technologies Limited (TSX:ET) is a leading global designer, manufacturer, and marketer of video and audio infrastructure solutions for the television, telecommunications, and new-media industries. It pays a quarterly dividend of $0.18 per share, or $0.72 per share annually, giving its stock a 4% yield at today’s levels.
Investors must also note that Evertz has raised its annual dividend payment for eight consecutive years, and its very strong financial performance, including record revenues of $363.6 million in fiscal 2015 and $100.6 million in the second quarter of fiscal 2016, could allow this streak to continue in 2016.
Which of these small caps should you buy?
Ensign Energy Services, Extendicare, and Evertz Technologies are three of the most attractive dividend-paying small caps in their respective industries. Foolish investors should take a closer look and consider initiating positions in one of them over the next couple of trading sessions.
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Fool contributor Joseph Solitro has no position in any stocks mentioned. Extendicare is a recommendation of Stock Advisor Canada.