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6 undervalued small caps with high dividend yields

As we enter what is often referred to as “confession season” – the period leading up to August reporting season when companies are obligated to inform the market if their results will be out of line with expectations – investors are already getting a taste of things to come with a number of companies including Reject Shop Ltd (ASX: TRS) hosing down earnings guidance.

The weak economic growth being experienced by many companies just reinforces how important high yielding, dividend-paying stocks can be to a portfolio. Luckily there are still a number of opportunities out there for investors to secure high yields.

1)      Bradken Limited (ASX: BKN) is forecast to pay dividends in financial year (FY) 2015 totalling 27.7 cents per share (cps) according to Morningstar research. This implies the stock is trading on a forecast fully franked dividend yield of 7.9%.

2)      McPherson’s Ltd (ASX: MCP) is forecast to pay fully franked dividends totalling 12.5 cps in FY 2015, implying a huge yield of 11.1%.

3) Holdings Limited (ASX: WTF) is forecast to pay dividends of 19.5 cps in FY 2015. Based on that forecast the stock is trading on a forecast fully franked dividend yield of 7.8%.

4)      MaxiTANS Industries Limited (ASX: MXI) is forecast to pay dividends totalling 7.8 cps in FY 2015. At the current share price, this equates to a forecast fully franked yield of 8.7%.

5)      WDS Limited (ASX: WDS) is forecast to grow its dividend from 7 cps in FY 2014 to 8 cps in FY 2015. If it manages to achieve this, then the stock is trading on a forecast yield of 8.3%.

6)      Countplus Ltd (ASX: CUP) is forecast to maintain a steady dividend of 12 cps from FY 2013 through FY 2015. This forecast implies a dividend yield of 6.8%.

Record profits and a fast growing, fully franked dividend…

This little known ASX company has already delivered eight consecutive years of profit and dividend growth… but with even more growth ahead, the shares are still a firm "BUY" today! Discover The Motley Fool's #1 dividend pick in our newly updated report. Simply click here for your FREE copy right now.​


Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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