Tuesday, July 19, 2022

5 Small/Mid-Cap Dividend Growth Stocks Answering The Call

I have set aside 20% in my asset allocation for small and mid-cap equities. Generally, smaller cap securities are more volatile, but often offer a higher rate of return over the long-term. Most of this allocation is covered by small cap mutual funds in my 401(k).

When investors hear dividend growth stocks mentioned, they immediately think of large-caps like Johnson & Johnson (JNJ), The Procter & Gamble Company (PG), The Coca-Cola Company (KO) and 3M Co. (MMM). Often small/mid-cap stocks are associated with growth stocks, and since the underlying companies are looking to grow there is little or no cash available for dividends. Not all small/mid-cap stocks fall under the growth category, many are considered value stocks and quite a few of these consistently increase their dividends.

Below is a representative sample of several small/mid-cap dividend stocks, along with the number of years of consecutive dividend increases:

Sysco Corporation (SYY) is a large distributor of food and related products, primarily to the foodservice or food-away-from-home industry. Years of Growth: 50, Yield: 2.3%

Genuine Parts Co. (GPC) is a leading wholesale distributor of automotive replacement parts, industrial parts and supplies, and office products. Years of Growth: 65, Yield: 2.6%

T. Rowe Price Group Inc. (TROW) operates one of the largest no-load mutual fund and life cycle fund complexes in the United States, with June 30 AUM of $776.6 billion. Growth: 35, Yield: 4.2%

Leggett & Platt Inc. (LEG) makes a broad line of bedding and furniture components and other home, office and commercial furnishings, as well as products for non-furnishings markets. Growth: 50, Yield: 4.9%

Mercury General Corp. (MCY), operating primarily in California, writes a full line of automobile coverage for all classifications of risk. Growth: 34, Yield: 5.6%

The above is not a buy list, but does demonstrate the availability of small/mid-cap dividend growth stocks to potentially help meet this portion of your asset allocation. Sometimes smaller companies are still run by the original founders' or their families and there is a pride in these companies that is not always found in those run by "professional managers".

Full Disclosure: Long JNJ, PG, KO, MMM, CBRL, LEG, GPC, O in various income portfolios. 

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