Investing

These 15 Stocks Are Among the Top Dividend Payers in the Russell 2000

John Seetoo

Published: October 16, 2024 9:23 am

Recognizing that one day “Magnificent 7” stocks like Apple were once small cap stocks (those with market caps between $250 million and $2 billion), FTSE Russell, a subsidiary of the London Stock Exchange, created the Russell 2000  Index. Composed of the lower market-cap  66% of the Russell 3000, it is considered the small-cap stock equivalent of the S&P 500 as a benchmark for analysts. 

By being market-cap weighted and based purely on math, rather than via committee, like with the S&P 500, the Russell 2000 is an unbiased gauge of the top stocks in the small-cap arena. The greater trading volatility and roller-coaster peaks and valleys often exhibited by small-cap stocks are certainly a part of a number of the Russell 2000 constituents. 

24/7 Wall Street Insights

• The Russell 2000 index represents the top small-cap (under $2 billion) US exchange traded companies.
• Small-cap companies often experience fast growth and more volatile trading than large-cap S&P 500 companies.
• Dividend stocks can be a good source of passive income for many investors.
• Global de-dollarization, led by BRICS, will lead to more overseas dollars coming back to the US, thus hiking inflation., and making passive income even more crucial in the future.

Dividends

While a few hundred Russell 2000 stocks pay a dividend, the vast majority that pay high dividends (over 7%) are mostly Real Estate Investment Trusts (REIT). This is mostly due to: 

1. The majority of independent REITs having a market cap of under $2 billion due to industry focus,
2. In order for a REIT to trade publicly, it must register with the SEC and agree to remit 90% of its profits to shareholders. Thus the more successful REITs will inevitably be more profitable, thus paying more dividends. 

Another benefit of REITs, although on a case-by-case basis, is that some REITs pay dividends monthly, rather than quarterly. 

The list of 15:

The below 15 stocks are the highest yielding Russell 2000 stocks based on market price at the time of this writing. As one might expert, the industry sector of high-yielding stocks is dominated by REITs. The only two exceptions are digital and printing company Xerox and B&G Foods, Inc. 

Passive Income Needs – Weaker US dollars

Recent news from BRICS (Brazil, Russia, India, China, South Africa) has accelerated the de-dollarization of the global economy, with member nations now making arrangements to settle international cross-border trade transactions with national currencies. As a result, international dumping of US Treasury bonds is likely to escalate, as the need to hold US dollars will continue to diminish. 

The deluge of dollars coming back to the US will inevitably hike inflation again. The latest CPI news also noted that jobless claims were also rising, along with inflation. The loss of buying power and reduced ability to get extra employment will make acquiring passive income an even greater imperative.

For those families with investable assets, they may find that dividend stocks are among the best options available.

Why Dividend Stocks?

As a source of passive income, dividend stocks have a number of attractive features:

• Low entry ticket price  (unlike investments in real estate or other businesses)
• Diversification of Industry (managing risk with a portfolio mix of various sector stocks)
• Market Liquidity (T+1 is now standard), vs. illiquid real estate or private businesses
• Volatility ranges (conservative investors and high rolling gamblers can both find stocks they like)
• Replaceability (if one stock receives adverse news, it can easily be replaced by another stock with a comparable yield)

24/7 Wall Street has a gigantic database of dividend stocks to suit all levels of risk tolerance, and has published numerous past articles highlighting them. The sample collections feature more than sufficient dividend stocks of all types to suit the criteria of practically any market-based investor’s criteria.