If you’ve been paying attention to the news, you know that the US economy is in very good shape. As Federal Reserve Chair Jerome Powell put it, “There’s no reason for that not to continue.”
Well, I’ll tell you what else is in good shape: Under the Radar Report’s Small Cap Dividend Portfolios.
Our last three portfolios have been returning an impressive 24% a year—almost three times the 9% return of the S&P/ASX All Ordinaries index.
But here’s the kicker: we’ve been at this for 8 years. Over that time, our portfolios have averaged over 13% a year, more than double the return of the All Ords at 6%.
This isn’t luck. It’s smart investing with just 12 stocks. In fact, you too can achieve this kind of all-weather performance, and it’s more tangible than growth from the largest economy in the world. The question is: how do we do it?
Don’t Follow the Herd—Follow Your Own Path
The first key to beating the market with small-cap dividend stocks is simple: don’t follow the market.
The All Ords is heavily weighted toward financial stocks—around 40%. But in our portfolios, we typically limit our exposure to around 20-25%. This isn’t by design; it’s the result of our stock-picking methodology.
We don’t base our decisions on what’s popular or trending. Instead, we look at a broad range of stocks, covering around 100 or so at any given time. From there, we identify the best opportunities.
Some of our best performers have come from outside the obvious sectors, like contracting.
Take Southern Cross Electrical (SXE) or SRG Global (SGG), for example. These companies have delivered great returns, showing that good stock picking can lead to significant gains in unexpected sectors.
Yes, we’ve had some successes in the financial sector too. Count (CUP), a stock that has been a “best buy” for our members, is one example. But as you can see, we’re not tied to one particular sector—we’re all about finding value where it exists.
Why Dividends Matter
One thing that sets our portfolios apart is the emphasis on dividends. Dividends are a powerful signal of a company’s profitability, and they offer investors a consistent source of income. Not every stock in our portfolio is a winner, but our strategy is designed so that the winners far outweigh the losers.
When you focus on stocks that pay regular dividends, you’re getting paid while you wait for the stock price to rise. Even when the market dips, the income keeps flowing. This is especially important when markets are trading at record highs. Dividends help maintain fiscal discipline within companies, ensuring they have a steady cash flow that can be returned to investors.
Diversification vs. Concentration: Striking the Right Balance
While diversification is important, our approach is different. We focus on concentration—selecting a handful of high-quality stocks that we believe can outperform the market. With just 12 stocks, you can still achieve exceptional returns, provided you choose wisely. The key here is stock-picking, not diversifying across hundreds of positions.
And remember, when the market is at a peak, as it is now, it’s essential to stay grounded and be selective. You don’t want to be chasing after the latest meme stocks or following the herd. Instead, ask yourself: Would I buy this stock today?
Mind Your Portfolio
Most investors make the mistake of setting their portfolios and forgetting about them. But successful investing requires active management. That’s why I always say: mind your portfolio. Take a look at it regularly—at least once a week—and ask yourself if you’d buy each stock today.
This is where common sense comes in. It’s tempting to follow what everyone else is doing, but true success comes from making independent, thoughtful decisions. Don’t just jump into the latest hot trend; focus on the fundamentals, and make sure each stock in your portfolio has a clear role to play in your long-term strategy.
A Glimpse Into the Future: Setting Up for 2025
Looking ahead, we’re excited to announce that a brand-new dividend portfolio is in the works. This will be designed specifically to set you up for success in 2025 and beyond. Our goal is to continue delivering strong, reliable returns—just as we’ve done over the last 8 years.
With markets at historic levels, now is the time to be cautious, strategic, and intentional about your investments. Stay focused, and remember: small-cap dividend stocks can offer superior growth without the roller-coaster ride of the broader market.
Smart, disciplined investing
Beating the market isn’t about following trends or buying the hottest stocks—it’s about smart, disciplined investing. With small-cap dividend portfolios, you can build a stable, high-performing portfolio that delivers consistent income and growth. By focusing on stock picking, dividend-paying companies, and maintaining a diversified yet concentrated portfolio, you can achieve impressive returns without relying on the broader market’s fluctuations.
So, the next time you’re thinking about your investments, remember: Don’t follow the herd. Build a portfolio of companies you believe in, and ask yourself every week, ‘Would I buy this stock today?’ That’s how you’ll stay ahead of the curve.
Stay tuned for our upcoming 2025 dividend portfolio. Until then, keep investing wisely!
