You want to find the highest dividend stocks to generate income? ASX investors don’t just look for income stocks but they also look for capital growth. Many investors will go straight to ASX Top 100 stocks for dividend income.

Investing for Growth

Our focus is on investing for growth. But that doesn't mean that you won't get income too. In 2008 our ASX Small Cap portfolio manager invested in the Small Cap stock TPG for below 60 cents. In 2020, he is receiving a special payout between 49-52 cents per share. Top dividend stocks like ASX Small Caps can give investors income plus share price growth potential. 

Invest for the long-term

When a Small Cap stock gives dividend payments, it shows that the Small Cap is a quality investment and represents an important price signal for the stock market.

When there is increased uncertainty and the stock market comes under pressure, if the Small Cap is able to maintain and even increase dividend payouts, this augurs well for your portfolio’s ability to weather the storm.

More than 50% of the small cap stocks we cover have a dividend yield

Of the 100 small cap stocks that Under the Radar Report actively covers for our stock report, more than 50% of these small companies give a dividend yield. Dividend stocks in your investment portfolio can be a handy addition to your income or indeed for retirees form the bulk of their income.

Small Cap stocks offer investors on the ASX, strong capital growth, but many of them also pay dividends as well. There are over 2,200 small cap stocks listed on the ASX and at Under the Radar Report we hunt for small cap stocks for our small cap stock report that will boost your portfolio’s returns through growth. That’s right, we are looking not just for a dividend yield but also for share price growth.

Our team is very experienced and we have a strong record over the past eight years of delivering independent fundamental analysis on over 100 small cap stocks. Many sites are simply PR for small companies but Under the Radar Report is an established independent research house with its own AFSL.

Our analysts sole purpose is to research companies that will make money for our subscribers. They work hard to filter through all the small cap stocks on the ASX to find stocks that offer dividends and provide share price growth.

Read more for the best investing advice and learn what small caps can do for your portfolio, annual income and wealth.

What about the risks of investing in the stock market?

There are risks in investing in ASX shares, but the ASX Small Cap dividend stocks we recommend have delivered an annual cash dividend yield of up to 5% before you include franking credits, rather than a yield of 2% from a Government bond. Plus, you get capital growth potential, unlike a bond or bank deposit.

ASX Dividends Stocks in a Small Cap Portfolio

Investing in the stock market is all about building a portfolio of 7-15 ASX stocks that will give you a combination of income and growth. It is also about minimising your risk through diversification.

Diversification is powerful to even out the returns to reduce risk

The great thing about Small Caps is the variety of different sectors on offer, which is sharply contrasted by the concentration of exposure in the ASX 200 to banking and resources. For example, you don't want to invest in only two companies which operate in the same sector. Don't put all your eggs in one basket!

Should I re-invest my dividends in Australia?

If you reinvest dividends this will work to supercharge your returns over the long-term. Albert Einstein is rumoured to have said that compound interest is the eighth wonder of the world, but we doubt this. Even so, you can see its effect when you reinvest dividends.

If you invested $1000 and achieved an 8% annual return every year over forty years, made up of 3% dividends and 5% capital gain, this would have appreciated to $21,720 with re-invested dividends and $7,040 without re-investment.

Dividend investing isn't everything

A strong balance sheet is most important. We have invested in a number of companies (including two in media and one in contracting) that made efforts to repair their balance sheets by forgoing dividends. These companies subsequently delivered great cash flow.

If I want income, why don't I just put my money in a bank?

Try finding a term deposit that has a rate above 2.5% where your money is not locked up. You can’t get 2% from a govt bond. Even if you do, you’re taking price risk. If interest rates go up, the value of your bonds goes down.

Our Blue Chip Value Price Target methodology, is based on two investment models that rely on each company’s investment fundamentals and consensus forecasts for earnings growth and dividend payments. They are also based on long-standing and validated valuation theory principles.

We also give you a neat summary covering the key investment metrics on over 40 top stocks, which includes the price target, expected 12-month return (target opportunity), our Radar Rating, and comment.

From valuation theory practicalities that make the Blue Chip Value Model work, it provides a great base from which to generate price targets to help you manage your Share portfolio and to find buying opportunities.