There is something to be said about choosing the best dividend stocks without any regard to the industry or sector. There is much more that can be said about diversifying your portfolio and not weighting it to any one sector. It’s better to choose a portfolio that covers stocks across multiple sectors. Income investors look for dividend paying stocks with nice yield. They also worry about whether the yield can be sustained. It’s important to look at the history of dividend growth as well. In spite of the possibility for tax increases, dividends still form a vital part of investing, particularly if you deal with a 401K or an IRA. It is important to note that companies which pay raised dividends for long periods of time can also be found among the small-cap segment of publicly-traded stocks. Here are a few worth considering.
Self-service security systems company Diebold (NYSE: DBD) has a remarkable record of 59 uninterrupted years of dividend growth. The company is expected to make that number 60 with an impending dividend increase in February. It is currently trading at 11 times trailing earnings and generates a yield of more than 3.5 percent. Universal Corporation (NYSE: UVV) operates in the tobacco industry. The company has an astounding 42 years of ever increasing dividends to shareholders. It currently yields more than 3.5 percent. It trades at a trailing P/E ratio of less than 10. Park National Corp. (AMEX: PRK) is a small banking company in the Midwest. The company maintains a large dividend at a roughly 70% payout ratio. Aircastle (NYSE: AYR) is a company that leases roughly150 commercial and passenger airlines worldwide. The company has a low payout ratio of 30 percent which indicates that another dividend boost is a possibility in 2013. Currently the dividend yield is 5.9 percent.
Taken as a whole, small-cap companies often have greater growth potential than their large-cap counterparts. They have more room to run and grow. Each of these companies offers a low valuation and dividend yields ranging from 3 to over 6 percent. If you are a dividend investor these companies are worth further research.