Summary: Small-cap dividend stocks can be an enticing option for investors seeking affordable entries to the market, as they typically have decent market caps ranging between $250 million and $2 billion and offer potential for significant growth while rewarding shareholders with regular dividend payouts. In this guide, we’re taking a look at 3 small-cap dividend stocks to buy in 2024 on online stock trading platforms such as Interactive Brokers.
Best Platform for Worldwide Stock Trading & Investing
-
Highly trusted multi-asset broker with clients in over 200 countries
-
Trade on 150 markets globally from a single platform (stocks, ETFs, futures, currencies, crypto & more)
-
Low commissions starting at $0 with no platform fees or account minimums
-
Easily fund your account and trade assets in 26 currencies
-
IBKR pays up to 4.58% interest on cash balances of $10k or more
What are small-cap dividend stocks?
Definition
Unlike the more prominent large-cap stocks, small-cap dividend stocks are often shares in not-so-established companies that can be more volatile due to their size. However, their potential growth can sometimes outweigh volatility risks, particularly if the company’s leadership manages cash flows effectively.
3 Small-Cap Dividend Stocks to Buy in 2024
Smaller companies might allocate dividends differently based on their growth stage. Therefore, it’s crucial that you perform thorough research when selecting the best small-cap dividend stocks that fit your risk tolerance and financial goals.
To find some worthwhile options, you should pay attention to fundamentals such as dividend yield, payout ratio, and the company’s financial health to determine the stock’s stability and appreciation potential.
To get started, you can consider some of the stocks on our list below:
- Smith & Wesson (NASDAQ: SWBI);
- Ethan Allen Interiors (NYSE: ETD);
- Dorchester Minerals (NASDAQ: DMLP).
Note
1. Smith & Wesson (SWBI)
Industry: Firearms
Dividend yield as of December 2023: 3.39%
Market cap as of December 2023: $653 million
Smith & Wesson is a leading American firearms manufacturer known for its high-quality products. With a market cap of around $650 million and dividend yields of around 3.40% as of December 2023, it falls perfectly into the category of small-cap dividend stocks.
As a part of the Russell 2000 index, Smith & Wesson can be a great addition to your investment portfolio. Its relatively strong free cash flow and growth potential are signs of a promising future for investors.
Note
Smith & Wesson stock price today
Your capital is at risk.
2. Ethan Allen Interiors (ETD)
Industry: Furniture and home interiors
Dividend yield as of December 2023: 5.19%
Market cap as of December 2023: $705 million
Ethan Allen Interiors is a well-known home furnishing company with a strong presence in the small-cap dividend stock market with a forward yield of 5.19%.
Over the years, Ethan Allen has experienced steady sales growth, which can be chalked up to its diverse product offerings and loyal customer base. The company’s financial health in 2023 has been quite stable, as it’s managed to remain debt-free. This strong financial position enables them to continue expanding their operations, especially through acquisitions that can provide them with increased diversification and market shares.
Ethan Allen Interiors stock price today
Your capital is at risk.
3. Dorchester Minerals (DMLP)
Industry: Natural gas and oil
Dividend yield as of December 2023: 11.42%
Market cap as of December 2023: $1.18 billion
Dorchester Minerals is a small-cap stock in the energy sector company focusing on the management of oil and natural gas properties. With a market capitalization of $1.18 billion and a forward yield of 11.42% as of December 2023, it is an appealing opportunity for investors looking for an entry into the oil industry.
Indeed, with a growing interest in renewable resources, the company may need to adapt its focus. But, as it stands, it offers investors ready exposure to the energy market and a robust dividend yield for investors seeking to diversify their portfolios.
Note
Dorchester Minerals stock price today
Your capital is at risk.
All stocks on our list are readily available on online stock trading platforms. Our go-to brokerage is Interactive Brokers, which boasts more than 2 million user accounts and trading features such as:
- Global stock-trading on 90+ market centers;
- Fractional shares;
- No minimum deposits;
- Additional income on fully paid shares;
- Lowest financing rates for margin accounts.
Note
1. Best dividend stocks;Â
2. 3 undervalued dividend stocks;
3. 3 Warren Buffet dividend stocks;
4. 3 best UK dividend stocks;
5. Top 50 dividend stocks.
Pros and cons of small-cap dividend stocks
Pros
- Passive income;
- Potential for increased payments down the line;
- Often affordable share prices.
Cons
- Dividends can be taxed;
- Small-cap companies are more volatile than larger, well-established Dividend Aristocrats and blue-chip stocks.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about small-cap dividend stocks
What are small-cap dividend stocks?
Small-cap dividend stocks are shares in companies with a market cap between $250 million and $2 billion that distribute a portion of their profits to shareholders.
What are the risks associated with small-cap dividend stocks?
Small-cap stocks can be more volatile than large-cap stocks due to their smaller size. That is, they may be more susceptible to economic downturns.
Where can I buy small-cap dividend stocks?
You can buy small-cap dividend stocks at online stock trading platforms such as Interactive Brokers.
Do small-cap companies pay lower dividends compared to large-cap stocks?
Small-cap companies do not necessarily pay lower dividends than large-cap companies. Therefore, investors should evaluate both the yield and the potential for capital appreciation before investing.
What are the best small-cap dividend stocks to buy in 2024?
Some of the best small-cap dividend stocks to buy in 2024 include Smith & Wesson (NASDAQ: SWBI), Ethan Allen Interiors (NYSE: ETD), and Dorchester Minerals (NASDAQ: DMLP).
