3 Small-Cap Stocks That Offer Big Dividends

March 21, 2023 at 07:00 AM EDT

small-cap dividend stocks

It’s no secret to many investors that some of the largest gains come from investing in small-cap stocks. These stocks can get overlooked because of their market capitalization. But that would be a mistake. Historical patterns show that frequently small-cap stocks are the ones that perform the strongest coming out of bear markets.

Don’t be mistaken, it’s no time to unequivocally say the bear market is over. It’s possible that stocks have one or more legs to fall. But even if that’s the case, there are opportunities in the market. One of those opportunities is in dividend stocks.

Dividend stocks help investors weather a bear market because they provide regular income that boosts your total return. And right now, there are several small-cap stocks that are offering attractive dividend yields that are above the industry average.

This Company Will Benefit as Supply Chains Continue to Unravel

Eagle Buik Shipping, Inc. (NASDAQ: EGLE) is a holding company that transports dry bulk cargo with its fleet of container ships. The company has an attractive dividend yield of 5.40% and has a 15% payout ratio.

EGLE stock is down 29% since reporting disappointing earnings on March 2, 2023. The miss by 25% on earnings was the most alarming. One concern is that demand for goods will continue to decrease. The latest retail sales numbers suggest that consumers are already beginning to shift from buying stuff to buying experiences. On the other hand, Eagle is beginning to see dry bulk costs rise as China reopens.

But at this point, the analyst community remains bullish on the stock. Analysts tracked by MarketBeat give the stock a consensus price target of $74.71 which is a 61% gain from the stock’s current price.

A Contrarian Play on Renewable Energy

The next stock on this list is SunCoke Energy, Inc. (NYSE: SXC). SunCoke is engaged in the production of coking coal. At first glance, many investors may want to stay far away from a coal company at a time when it’s clear that coal companies are out of favor with many in the federal government.

But coking coal is different from coal used to generate electricity. It’s needed to turn iron ore into finished steel for vehicles, appliances and other applications. McKinsey expects the price of coking coal to remain elevated for several years. That is being reflected in the revenue and earnings of SunCoke, which are growing on both a sequential and year-over-year basis.

This should provide a nice tailwind for SXC stock, particularly as earnings are supposed to increase by 47% in 2023. That kind of dividend growth would mean the company is likely to increase its dividend, which currently has a yield of 3.6%.

An Area to Invest if Russia’s War on Ukraine Continues

The last stock on this list is Flex LNG Ltd. (NYSE: FLNG). Since the outbreak of Russia’s war against Ukraine, investors have become aware of the need for liquefied natural gas (LNG). Europe relies on LNG for much of its heat. And as the most efficient use of hydrocarbons, global demand for LNG is rising.

And LNG needs to be transported overseas. This is where Flex LNG comes in. This is a competitive market, but Flex LNG is trying to carve out a niche by focusing on new, efficient vessels in a commitment to reduce global emissions.

Revenue and earnings are expected to grow in the low single digits for the next five years. But that should be enough for the company to maintain or grow its dividend which currently yields over 9%.

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3 Small-Cap Stocks That Offer Big Dividends

This Company Will Benefit as Supply Chains Continue to Unravel

A Contrarian Play on Renewable Energy

An Area to Invest if Russia’s War on Ukraine Continues

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