This article will look into the 10 small-cap dividend stocks that have driven year-to-date gains.

Generally, large-cap stocks stand at the top of investment discussions. However, small-cap stocks, with a market capitalization between $300 million and $2 billion, have often offered attractive growth opportunities. Investors interested in a mix of income and capital growth frequently find this market segment substantially valuable. Some companies demonstrating strong financial health and consistency in their dividend payments may be what they are looking for.

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.

At times, investors overlook small-cap dividend stocks because they perceive smaller companies as less stable than their large-cap counterparts. However, few small-cap companies have successfully utilized their niche positioning and implemented effective capital allocation strategies to generate strong returns. Many large-cap peers face a slower growth rate during market saturation, while small-cap companies expand rapidly. It leads to an appreciation in the share price, often contributing to growth in the dividend income.

Several macroeconomic and sector-specific factors contributed to the strong performance of small-cap dividend stocks this year. These factors include stabilizing interest rates, increased demand in niche industries, and sector-specific tailwinds benefiting smaller firms. For instance, the market sentiment towards dividend stocks, particularly those with earnings growth, could improve with stabilized interest rates. Monetary policies, such as interest rate changes, directly impact small-cap dividend stocks by influencing borrowing costs and corporate reinvestment strategies. Furthermore, when met with high demand, developing specific industries like technology and consumer discretionary benefits the smaller companies that cater to such market segments. In this article, we will look deeper into the factors and events contributing to the rise of small-cap dividend stocks. Understanding the reasons behind the rise or fall of these stocks is necessary before deciding in favor of or against them.

Small-cap dividend stocks might be appealing, but not solely because of their potential capital appreciation. Many of these companies provide a higher dividend yield than their larger-cap counterparts. Many small-cap companies offer high yields to attract investors and create long-term shareholder value. Some dividend reinvestment strategies bring an upward trend to the returns, compounding gains over time. However, investors need to analyze the sustainability of these dividends to make an informed decision. The article will help you with this analysis.

As we deeply explore the ten small-cap dividend stocks driving year-to-date gains, we must consider the stocks’ financial health and future growth potential. Our list comprises companies that have delivered strong returns in the recent year. Before making the investment decision, however, investors are asked to consider the ability of these stocks to sustain their dividend payouts and the potential to increase them in the future. You may be looking to optimize your portfolio by including income-generating assets or simply seeking to use the high-growth opportunities presently available in the market. Either way, our list provides compelling investment prospects for you to consider.

Stay with us as we count down from 10 to 1, the top performers this year. Our first placer may surprise you.

Our Methodology

In our article, we have listed 10 small-cap dividend stocks with market capitalizations ranging from $300 million to $2 billion. We compiled the list by considering only those small-cap companies with year-to-date (YTD) returns of at least 4%. We also eliminated from our list the companies that do not meet a minimum dividend yield of 2%. With these criteria, we wanted to focus on capital appreciation and income generation on our list. Small-cap companies meeting these benchmarks will be helpful for investors who are focused on consistency in income generation and may intend to make informed decisions about their investment portfolios. The stocks are ranked according to their dividend yields, as of February 23.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

10. AdvanSix Inc. (NYSE:ASIX)

Dividend yield: 2.15%

Dividend payout ratio: 39.51%

Ex-Dividend Date: March 10, 2025

Number of Hedge Funds: 15

With the current market cap of $795.96 million, AdvanSix Inc. (NYSE:ASIX) experienced a year-to-date increase of 4.49% as of February 24, 2025.

The American-based company produces nylon six and related chemicals such as caprolactam and ammonium sulfate fertilizers. In North America, the demand for sulfur nutrition is rising, while the supply of ammonium sulfate remains tight, contributing to an increase in the value of AdvanSix Inc. The company’s commitment to sustainability, demonstrated by its program SUSTAIN (Sustainable U.S. Sulfate to Accelerate Increased Nutrition), is also widely recognized. With this program, the company is in the green chemicals market, which is valued at $108.53 billion, further contributing to the company’s value. However, AdvanSix Inc. (NYSE:ASIX)’s customer sales declined because of the extended plant turnaround. Additionally, the upward raw material prices are expected to impact fertilizer margins.

The dividend yield is 2.15%, and the dividend payout ratio is 39.51%. AdvanSix Inc. (NYSE:ASIX) can cover its dividend payments using only its earnings—close to two-thirds of its earnings are used for reinvestment or debt repayment. The Insider Monkey database indicates 15 hedge fund portfolios holding stakes in the company’s stocks at the end of Q4 2024, indicating a solid institutional interest in the company. Investors wanting to benefit from the dividend payout on March 24, 2025, can purchase the company Before March 10, 2025.

9. Northrim BanCorp, Inc. (NYSE:NRIM)

Dividend yield: 3.16%

Dividend payout ratio: 37.16%

Ex-Dividend Date: March 6, 2025

Number of Hedge Funds: 7

With a 4.20% increase in value this year, as of February 24, 2025, the market cap of Northrim BanCorp, Inc. (NYSE:NRIM) currently stands at $446.81 million.

The Alaska-based bank holding company saw an increase in deposits and loans by 7% compared to the second quarter of 2024. The share of the deposit market has grown, increasing by 4% in the last year and a notable 42% over the past five years. Additionally, the acquisition of Sallyport Commercial Finance, LLC on October 31, 2024, increased the purchase receivable income, which later translated to an increase in Northrim BanCorp, Inc. (NYSE:NRIM)’s value. Another significant contributor was the increase in mortgage banking income in the fourth quarter, caused by an increase in the fair value of a mortgage servicing portfolio that the company purchased from another financial institution. Northrim BanCorp, Inc. is also part of our top 15 dividend contenders list.

The company offers a dividend yield of 3.16%. Northrim BanCorp, Inc. (NYSE:NRIM)’s payout ratio of 37.16% suggests that the company is generating more earnings than required to cover its dividend payments. From the Insider Monkey database, seven hedge fund portfolios owned stakes in the company at the end of Q4 2024. Investors can purchase the shares before March 6, 2025, and receive dividend payments on March 14, 2025.