Which Stocks Pay Dividends? Small Cap vs Large Cap for High Dividends

  • Even though a greater portion of large cap stocks pay dividends, there are almost TWICE as many dividend stocks among small cap vs large cap stocks.
  • If you look at all non-large-cap stocks, there are a total of 1,671 dividend stocks vs. just 543 dividend stocks among large-cap stocks - that's over 3x as many.
  • While large cap stocks are an excellent source of companies that pay high dividends, we think small cap and mid cap dividend stocks can provide the best high dividend yield investments.

 

Please don't miss out on small dividend stocks.

There are roughly 6,500 stocks in the U.S... Of those stocks, a total of 2,527 (roughly 40%) pay some kind of dividend.

However, when you only include companies with a dividend yield of at least 1% (anything less than 1% probably isn’t worth talking about for high dividend income), that number falls to 2,214, meaning roughly 34% of the total stocks pay a dividend with at least 1% dividend yield.

Dividend stocks come in all shapes and sizes. You can find dividend paying companies among small cap stocks, mid cap stocks, large cap stocks, the S&P 500, and among almost any collection of stocks you can gather.

Let’s look at how many dividend stocks are in each size group:

Nano Cap Stocks With Dividends

The nano cap stock definition is companies with a market cap between $0M - $50M. Of the 1,660 nano cap stocks currently trading in the U.S., only 82 (5% of the total) pay a dividend yield of at least 1%.

Micro Cap Stocks With Dividends

The micro cap stock definition is companies with a market cap between $50M - $300M. Of the 1,369 micro cap stocks currently trading in the U.S., only 370 (27% of the total) pay a dividend yield of at least 1%.

Small Cap Stocks With Dividends

The small cap stock definition is companies with a market cap between $300M - $2B. Of the 1,617 small cap stocks currently trading in the U.S., only 626 (39% of the total) pay a dividend yield of at least 1%.

Mid Cap Stocks With Dividends

The mid cap stock definition is companies with a market cap between $2B - $10B. Of the 1,133 mid cap stocks currently trading in the U.S., only 593 (52% of the total) pay a dividend yield of at least 1%.

Large Cap Stocks With Dividends

The large cap stock definition is companies with a market cap of $10B and above. Of the 789 large cap stocks currently trading in the U.S., only 543 (69% of the total) pay a dividend yield of at least 1%.

S&P 500 Stocks With Dividends

Of the 500 stocks currently trading in the S&P 500, only 360 (72% of the total) pay a dividend yield of at least 1%.

There Are Far More High Dividend Stocks Among Small Caps Stocks vs Large Cap Stocks

Stock Size Total Stocks Dividend Stocks % Paying Dividends
Nano Cap Stocks 1,660 82 5%
Micro Cap Stocks 1,369 370 27%
Small Cap Stocks 1,617 626 39%
Mid Cap Stocks 1,133 593 52%
Large Cap Stocks 789 543 69%
S&P 500 Stocks 500 360 72%
All Stocks 6,569 2,214 34%

So what does this tell us? There are two important takeaways:

First, larger stocks are more likely to pay dividends. We can see that 72% of S&P 500 stocks pay dividends, whereas only 5% of nano cap stocks, 27% of micro cap stocks, and 39% of small cap stocks pay dividends. This makes sense since larger companies are more likely to have:

  • large cash reserves needed to pay a steady dividend
  • earnings power to support paying out dividends to shareholders
  • pressure to return cash to shareholders rather than reinvest in the business for mediocre growth

However, even though a greater portion of large cap stocks pay dividends, there are almost TWICE as many dividend stocks among small cap vs large cap stocks!

For example, there are only 543 large cap dividend payers to pick from, whereas there are 1,078 dividend paying stocks in the nano cap, micro cap, and small cap market combined.

Why is this? It’s because there are so many more small companies than large companies. So even though the percent that pay dividends is less (just 23% for all small companies combined vs. 69% for large cap stocks), the actual number of dividend stocks is much larger.

And if you expand to look at all non large cap stocks (nano cap, micro cap, small cap, and mid cap stocks combined) there are a total of 1,671 dividend stocks vs. just 543 dividend stocks among large cap stocks. That means there are over 3x as many dividend stocks that are not large caps as there are large cap dividend stocks.

Small Cap Stocks and Mid Cap Stocks: High Dividends + High Growth

So why does this matter?

While large cap stocks are an excellent source of companies that pay high dividends, we think small cap and mid cap dividend stocks are often overlooked. And that’s too bad.

Not only are there many more high yield stocks to choose from (over 3x as many!), but fishing among smaller companies is where you often find the best high dividend stocks for yield and income.

There are many undiscovered dividend stocks that yield 5% - 15% per year! You won’t find that kind of high dividend yield from General Electric GE or AT&T T.

Small cap and mid cap stocks not only offer some of the best opportunities for high dividend income, but research suggests small companies (especially those that are undervalued) tend to outperform their larger peers. 

Add Some Small Cap Stocks and Mid Cap Stocks for the Best High Dividend Portfolio

The bottom line is dividend stocks can be a great way to earn consistent income and make money in the stock market. While classic blue chip dividend stocks such as Apple AAPLGeneral Electric GEFord FAT&T TMicrosoft MSFTBP BPJohnson & Johnson JNJVerizon VZWalmart WMTCoca-Cola KO, and Procter & Gamble PG can make a great foundation for a high dividend portfolio, we think you should also look further.

If you dig a little deeper and are willing to explore the best dividend stocks for high income among small cap stocks and mid cap stocks, you can collect incredible rewards.

To see my favorite undiscovered high-dividend stocks, check out Uncharted Stock Investor here

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All data as of 7/26/19

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