While Most of Wall Street focuses on large and mega-cap stocks, as they provide a degree of safety and liquidity, many investors are limited in the number of shares they can buy. Many of the most significant public companies, especially the technology giants, trade at prices up to $1000 per share, while many are in the low to mid-hundreds. It’s hard to get decent share count leverage at those steep prices.
Many investors, especially more aggressive traders, look at lower-priced stocks to make good money and get a higher share count. That can help the decision-making process, especially when you are on to a winner, as you can always sell and keep half.
For low-price stock skeptics, many of the biggest companies in the world, including Apple, Amazon, NetFlix, and NVIDIA, all traded in the single digits at one time.
We screened our 24/7 Wall St. research database, looking for smaller-cap companies that could offer patient investors enormous returns for the rest of 2024 and beyond. Five companies that hit our screens also pay huge dividends, making the total return potential even more intriguing.
Barings BDC
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This business development company is an industry leader and pays a massive 11.34% dividend. Barings BDC, Inc. (NYSE: BBDC) is a publicly traded, externally managed investment company elected to be treated as a business development company under the Investment Company Act 1940.
It seeks to invest primarily in senior secured loans, first lien debt, unitranche, second lien debt, subordinated debt, equity co-investments, and senior secured private debt investments in private middle-market companies operating across various industries.
It specializes in :
- Mezzanine,
- Leveraged buyouts
- Management buyouts
- ESOPs
- Change of control transactions
- Acquisition financings
- Growth financing
- Recapitalizations in lower-middle market, mature, and later-stage companies
It invests in manufacturing and distribution, business services and technology, transportation and logistics, and consumer products and services. It invests in the United States. It invests in companies with EBITDA of $10 million to $75 million, typically in private equity sponsor-backed.
The Cato Corporation
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Paying shareholders a gigantic 14.68% dividend, this company, founded in 1946, could attract value buyers at current trading levels. The Cato Corporation (NYSE: CATO) and its subsidiaries operate as a specialty fashion apparel and accessories retailer in the southeastern United States.
It operates through two segments:
- Retail
- Credit.
The company’s stores and e-commerce websites offer a range of apparel and accessories, including:
- Dressy, career, and casual sportswear
- Dresses
- Coats
- Shoes
- Lingerie
- Costume jewelry
- Handbags
- Men’s wear
- Lines for kids and infants
It operates its stores and e-commerce websites under these names:
- Cato
- Cato Fashions
- Cato Plus
- It’s Fashion
- Fashion Metro
- Versona names
It also provides credit card services and layaway plans for its customers.
Medical Properties Trust
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Medical Properties Trust, Inc. (NYSE: MPW) stands out in the healthcare industry and pays a rich 12.73% dividend. It acquires, develops, and invests in healthcare facilities, leasing them to healthcare operating companies and providers.
Medical Properties Trust’s unique position is further enhanced by its provision of mortgage loans, working capital, and other term loans to its tenants/borrowers. This, coupled with a massive 12.80% dividend, offers investors incredible value at current price levels.
The company has a massive $18.3 billion portfolio of properties, most of which are acute care facilities.
The stock has rallied recently on news of substantial asset sales and decent earnings, including the sale of five hospitals in New Jersey and California to Prime Healthcare for $350 million and five hospitals in Utah for $866 million.
Wall Street has applauded the asset sales, and with 206 million shares sold short, which represents a stunning 48% of the float, a huge short squeeze could be in order.
Prospect Capital
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Hedge Funds love this top Business development company, and the gigantic 13.36% dividend makes it a potential total return home run. Prospect Capital Corporation (NASDAQ: PSEC) specializes in the middle market, mature, mezzanine finance, later stage, emerging growth, leveraged buyouts, refinancing, acquisitions, recapitalizations, turnaround, growth capital, development, capital expenditures and subordinated debt tranches of collateralized loan obligations, cash flow term loans, market place lending, and bridge transactions.
It also invests in the multi-family residential real estate asset class. The fund makes secured debt, senior debt, senior and secured term loans, unitranche debt, first-lien and second-lien, private debt, private equity, mezzanine debt, and equity investments in private and microcap public businesses.
Prospect Capital focuses on both primary origination and secondary loans/portfolios and invests in situations such as debt financing for private equity sponsors, acquisitions, dividend recapitalizations, growth financings, bridge loans, cash flow term loans, and real estate financings/investments.
The company invests in the follwing sectors and business silos:
- Aerospace and defense
- Chemicals
- Conglomerate and consumer services
- Ecological
- Electronics
- Financial services
- Machinery and manufacturing
- Media
- Pharmaceuticals
- Retail
- Software
- Specialty minerals
- Textiles and leather
- Transportation,
- Oil gas and coal production
In addition to favoring materials, industrials, consumer discretionary, information technology, utilities, pipeline, storage, power generation and distribution, renewable and clean energy, oilfield services, healthcare, food and beverage, education, business services, and other select sectors.
Uniti Group
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Way off the radar, this specialty company delivers a massive 10.68% dividend. Uniti Group, Inc. (NASDAQ: UNIT) is an internally managed real estate investment trust engaged in the acquisition and construction of mission-critical communications infrastructure and is a leading provider of fiber and other wireless solutions for the communications industry.
As of December 31, 2023, Uniti owns approximately 140,000 fiber route miles, 8.5 million fiber strand miles, and other communications real estate throughout the United States.
Uniti is not resting on its laurels. The company recently announced a significant network expansion in Huntsville, Alabama, one of its existing 30 enterprise markets. This expansion, spanning approximately 70 route miles, is not just a move to increase its footprint. It’s a strategic decision to support one of its hyperscale customers, demonstrating Uniti’s forward-thinking approach and potential for future success.
Uniti provides multiple conduits and high-strand count fiber to its hyper-scale customer to connect key data center locations within the Huntsville metropolitan area and tie in diverse, long-haul routes connecting Huntsville to other regional and national data center markets.
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