In search for strong yields, many investors have tilted their portfolios towards the high dividends and long track records of the market's largest firms. Conversely, some of the best opportunities for dividend hunters could lie within the smaller side of the stock market. Generally, when investors look towards small-cap stocks, they do so from a vantage point of growth and capital appreciation. After all, the iShares Russell 2000 Index (ARCA:IWM) has been a top long-term performer over the last few decades. Additionally, there have been many academic studies that show that small-caps outperform larger ones over the years.
Given the potential for outperformance and juicy yields, investors should consider the small-cap space for dividend payers. For those looking for single ticker access to dividend-focused small-caps, ETF issuer WisdomTree (NASDAQ:WETF) has the most exposure to the theme. The WisdomTree SmallCap Dividend ETF (ARCA:DES) tracks 642 different firms including imaging firm Lexmark (NYSE:LXK) and utility ALLETE (NYSE:ALE). Over the past five years, DES has managed to return 8.9% annually versus 7.7% for the previously mentioned IWM. Expenses run a cheap 0.38% and DES yields 2.99%.
Source: Investopedia
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