3 small caps with big dividends

Most of the shares with big dividend yields are ones that are large caps, don’t have much growth left and are priced quite cheaply accordingly.

Small caps don’t usually have a big dividend yield because they are re-investing for growth or simply not profitable yet.

However, there are a few small caps on the ASX that do have big dividend yields, like these:

Dicker Data Ltd (ASX: DDR)

Dicker Data is a hardware distributor wholesaler which has been operating for around 35 years.

If any business wants to succeed these days it needs to have good technology to help get the job done. Dicker Data is thriving in this space.

Dicker Data is currently trading with a grossed-up dividend yield of 8.96%.

WPP Aunz Ltd (ASX: WPP)

This locally listed business is a company bringing together dozens of advertising and media businesses together to best serve Australian business advertising needs.

It’s steadily growing its dividend and also a large grossed-up yield of 7.79%.

Retail Food Group Limited (ASX: RFG)

Retail Food Group is the master franchisor behind a number of businesses such as Gloria Jeans, Brumby’s, Crust Pizza, Cafe2U and Michel’s Patisserie.

The business manages to keep churning out growth in the underlying earnings per share and the dividend, which makes it an underrated dividend success story.

I don’t love the business but the dividend yield and growth is undeniable.

It’s currently trading with a grossed-up dividend yield of 9.44%.

Foolish takeaway

All three businesses have risks, which is why they’re trading cheaply. In the long-term I think Retail Food Group is the one most likely to generate the strongest total shareholder return because it’s growing overseas and that has a lot of potential.

I'd prefer to buy our number one dividend share for FY18 over the other three because it has good growth and dividend prospects.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Dicker Data Limited and Retail Food Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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