If you are in the market for small companies paying big dividends, you should take a look at Collection House Ltd (ASX: CLH) and Gentrack Group Ltd (ASX: GTK). These two small-cap shares pay big dividends and could be worthy of a closer inspection.
Collection House
Collection House is a $188 million debt collector that recently fell from grace. From late 2015 to early 2016, the Collection House share price was cut from $2.30 to $0.93. However, with the company having undergone a managerial change and undertaken efficiency improvements, it may be time to run the ruler over its shares once again.
Collection House pays dividends of 7.8 cents per share, which represents a dividend yield of 5.6% at today's share price. The dividends are also fully franked.
Gentrack
Gentrack is a New Zealand based software business. Unlike Collection House, its customers are happy to stay around for a long time, since Gentrack's software is integral to their business.
The software is used by airports, energy companies and water bodies for just about every part of their business. Since the software is so embedded in their operations, it makes it difficult for a customer to change to another provider. That's good for revenue.
As a Kiwi company, Gentrack's dividends are unfranked. However, at the current Gentrack share price it has a dividend yield of 3.3%.
Foolish Takeaway
Being a small company does not make an investment any more risky, if you know what you are doing. However, Collection House has disappointed investors in the past, which automatically makes it a higher risk idea, in my opinion. Meanwhile, Gentrack appears to be a great business but its shares are a little bit expensive.
Nonetheless, I think these two companies are worthy of further research in 2017.
