3 Dividend-Paying Small Caps for Your Watchlist

The small cap area of the market can be fertile ground for smaller investors

Todd Wenning 16 July, 2013 | 3:42PM

Many investors associate dividend investing strictly with owning slow-and-steady blue chip shares. And whilst larger companies can be an important foundation in an income producing portfolio, dividend-minded investors shouldn't forget about small cap opportunities.

Indeed, one of the key advantages of being an investor with a smaller capital base is that we can make meaningful investments in promising smaller companies without distorting the share price. Large institutions with billions of pounds to invest simply cannot do the same, which makes the small cap area of the market such fertile ground for investors like us. As Warren Buffett once put it, "It's a huge structural advantage not to have a lot of money."

Granted, small-cap shares can at times be much more volatile than larger ones, so it's even more important to be selective and have a long time horizon when searching for opportunities in this area of the market.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Todd Wenning

Todd Wenning  is an equities analyst with Morningstar.

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