The Motley Fool

Three small cap stocks with huge dividend yields

When investors think of fully franked dividends, they often think of just the big, brand-name stocks. These include large banks like Commonwealth Bank (ASX: CBA) and marquee retailers like Woolworths (ASX: WOW).

Yet the small-cap sector may hold even more promise for income-oriented, ASX investors. Here are three lesser known companies paying impressive, fully franked dividends.

Idea #1: Salmat

Sydney-based marketing and communications company Salmat Limited (ASX: SLM) has a market cap of around $300 million. Shares trade for less than 14 times earnings, while the shares pay a dividend in the 8% range, fully franked.

While the company is in the midst of a turnaround, the balance sheet boasts over $100 million in net cash, growth may come from the call centre business and the new CEO has a good track record at his former employer.

Idea #2: RCG Corporation

RCG Corporation (ASX: RCG) is a holding company with its primary business centered in The Athlete’s Foot, a chain of footwear stores that RCG both operates and franchises. While many retailers are struggling, The Athlete’s Foot has recently seen strong same-store sales growth and the company’s wholesale division is also growing quickly.

RCG shares trade for around 24 times earnings – not an unreasonable multiple given the growth profile – and pay a fully franked yield in the 6% range.

Idea #3: Coventry Group

Industrial play Coventry Group (ASX: CYG) operates a number of businesses, with fasteners and fluids being the primary business lines. While the company recently issued an earnings downgrade and announced it will exit its furniture parts business, Coventry Group still has a net cash position of over $50 million, while a share buyback program is also underway. CYG shares trade for a shade a little under 10 times (trailing) earnings and pay a fully franked dividend with a yield over 8%.

In the market for even more high yielding ASX shares? Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

Motley Fool contributor Catherine Baab-Muguira has no financial interest in any company mentioned in this article.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!