These 2 Small-Cap Stocks Have Big Dividend Yields

Are you an income investor looking for new dividend stocks? Then let’s look at two, including Student Transportation Inc. (TSX:STB)(NASDAQ:STB), which yields over 7%.

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I’m always on the lookout for interesting dividend stocks, since I enjoy a side of income to go with my growth. Today, we have two small-cap stocks to check out. Let’s start with the smaller of the two dividend players.

Ten Peaks Coffee Co. Inc. (TSX:TPK)

Ten Peaks is a baby stock in terms of market capitalization, sitting at $57.49 million. As the name suggests, this is a coffee company, specializing in green coffee and green coffee decaffeination. I assumed you’d be like me and have no idea what that means, so I’ve looked it up for you. It’s a process of soaking coffee beans in a caffeine-free coffee extract. It’s a way of decaffeinating coffee that apparently retains all the flavour of caffeinated coffee.

How does the stock look? It has a P/E ratio of only 10.82, so the earnings of this company aren’t expensive. Its net profit margin only sits at 5.06%, but that looks good when compared to many other Canadian beverage makers. Earnings per share currently sit at $0.56.

For a little company, the stock offers a nice dividend. Ten Peaks has offered a steady quarterly dividend of $0.0625 per share over the last five years. That turns into $0.25 per year for a nice yield of 3.97%.

Student Transportation Inc. (TSX:STB)(NASDAQ:STB)

Student Transportation provides school transportation and management services in Canada and the U.S. to public and private schools. This is another small-cap stock, sitting at $704 million.

How does this one look? It’s got a far higher P/E ratio of 63.27, so these earnings are not cheap. Its net profit margin is 1.01%, lower than most of its peers. Earnings per share sit at $0.12 — also below most of its peers.

Where this stock shines is in its dividend offering. It currently pays a “monthly” dividend (11 times per year) of U.S.$0.0367 for an annual payout of U.S.$0.40. This payout has held steady since 2015 and translates to a huge yield of 7.24%.

Investor takeaway

Both stocks offer nice dividends. STB has a higher yield, but it has a higher earnings price and lower profit margin than Ten Peaks. You will have to decide which is the better option for you if you aren’t interested in both.

For more Fool reporting on dividend stocks, check out these two recent stories. This one discusses dividend stocks that are outperforming the TSX, and this one discusses a stock yielding over 6%.

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 Susan Portelance has no position in any stocks mentioned.

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