Australian small caps are pushing higher in 2022 after a shaky start to the year. The large end of the market in the S&P/ASX 200 Index (ASX: XJO) has climbed 41 basis points today and sits at 7,417, having rallied 6% in the past month.
ASX small caps have followed suit and are only lagging by a small amount, also up by almost 6% during the last month of trade.
The S&P/ASX Small Ordinaries Index (ASX: XSO) spiked 2% in the past week, not enough to erase a 6% loss that investors have penalised the segment with so far in 2022.
Interestingly, with all the talk of inflation, investors can look to the smaller end of town in search of some juicy dividends at more than respectable yields. Take a look.
Small cap dividends? Please tell me more
ASX small caps have often lent investors an uncorrelated return to add into their portfolios. So hearing that some of these names also pay dividends is music to our ears.
One interesting name is Beacon Lighting Ltd (ASX: BLX). Two experts are also constructive on the stock and rate it as a buy right now. Beacon paid a fully franked 4.3 cents per share dividend in March.
Both Martin Hickson of 1851 Capital and portfolio manager at Hayborough Investment Partners, Ben Rundle, agree that Beacon is worth its weight at present.
"We think Beacon's a buy. We're going through a renovation boom at the moment that's supportive of their earnings," Hickson said during an episode of Buy Hold Sell on Livewire. Rundle agreed.
"We also think the market is underestimating the growth in their trade and international businesses. So, Beacon's a buy," he added.
Hickson also advocates to buy Capitol Health Ltd (ASX: CAJ), noting the new CEO's turnaround and a respectable valuation.
"They've [Capitol] got $100 million in firepower to deploy into acquisitions, trades on an EV/EBITDA multiple of 8x, versus private transactions being done at 12x. So, we think it's a buy," he remarked.
Meanwhile, Rundle is supportive of Money3 Corporation Ltd (ASX: MNY). He likes the company's recent earnings strength, plus its growth vision appears more visible from recent funding.
"I think it's a buy," he noted, agreeing with Hickson, who said the same thing about Money3.
"As he [Hickson] pointed out, they upgraded earnings the other day and they probably will upgrade again. They've just got more funding as well, which can support their growth plans. So, I think it's a buy," Rundle concluded.
Money3 has paid a 13 cents per share cumulative dividend since 8 April 2021.
The returns for each of these names is charted below. In that time, Beacon lighting has surged over 29%, beating the other recommendations.
