In this article, we discuss 11 Dogs of the Russell 2000. You can skip our detailed analysis of the performance of small-cap and dividend stocks over the years, and go directly to read 5 Dogs of the Russell 2000.
The Dogs of the Russell 2000 group refers to the highest-yielding stocks within the Russell 2000 Index. Investors often show a preference for stocks with high dividend yields, making these strategies convenient for guiding investment choices within the index. This approach simplifies the decision-making process for investors seeking stocks that offer substantial dividend returns. The Russell 2000 Index is a stock market index that measures the performance of the 2,000 smallest publicly traded companies in the US. Since the start of 2024, the index is down by 1.94%, compared with a 2.29% gain of the S&P 500.
While the Russell 2000 has recently lagged the overall market, historical records indicate that this hasn’t always been the case. A report from CME Group highlighted a specific instance when the Russell 2000 outperformed the S&P 500 by 80% during a period of intense economic upheaval in the stock market. This period, spanning from January to June 1980 and then from August 1981 to December 1982, witnessed double-digit inflation, double-digit interest rates, and consecutive recessions. Investors, during this time, perceived smaller companies as more adept at navigating challenging economic conditions compared to their larger counterparts. The report also mentioned that from 1999 to 2014, a period of financial turmoil encompassing events such as the tech market decline, the 9/11 attacks, the subprime bubble, economic downturns, and the implementation of quantitative easing, small-cap stocks once again demonstrated a rapid outperformance over large-cap stocks. Specifically, the Russell 2000 significantly surpassed the S&P 500, delivering a notable 114% outperformance.
Despite the impressive historical returns of small-cap stocks, they often carry an inherent level of volatility. The prevailing perception is that smaller companies may lack sufficient excess cash flow to meet shareholder obligations. Consequently, when investors seek dividend-paying stocks, the general tendency is to concentrate on larger companies, which are perceived as having more stable financial positions and greater capacity to fulfill dividend commitments. Furthermore, these companies are recognized for their consistent practice of regularly increasing dividends, a characteristic that holds a particular allure for investors. International Business Machines Corporation (NYSE:IBM), The Procter & Gamble Company (NYSE:PG), and Colgate-Palmolive Company (NYSE:CL) are some of the most prominent dividend stocks that have raised their dividends for decades.
Also read: 12 Dogs of the Dow Dividend Stocks to Buy
That said, a Wall Street Journal report has provided insights into the performance of small- and mid-cap (SMID) dividend-paying stocks over the years. According to the report, these stocks have historically demonstrated appealing income, total returns, and lower risk. Citing data from Empirical Research Partners, the report highlighted that SMID dividend payers delivered an annual return of 15.68% from 1975 to June 2023, surpassing both large-cap dividend payers and the overall stock market. Additionally, the volatility of these SMID dividend-paying stocks was approximately 15% lower than that of the average SMID stock. The distinctions become even more significant when considering SMID stocks that consistently increase the dividends they distribute to shareholders. Over the past 35 years, these dividend-growers have achieved more attractive annualized gains while exhibiting less risk compared to the average SMID dividend payer.
In view of these arguments, we will discuss 11 dogs of the Russell 2000 in this article.
Photo by Dan Dennis on Unsplash
Our Methodology:
We began with a pool of 2000 stocks from the Russell 2000 and identified dividend-paying stocks from this selection. The Russell 2000 is a stock market index that measures the performance of approximately 2,000 small-cap stocks, so the stocks listed below have market capitalizations ranging from $300 million to $2 billion, as of January 22. As a majority of the stocks in the index offer dividends, we specifically picked the 11 stocks with the highest dividend yields, recorded on January 22. The stocks are ranked in ascending order of their dividend yields.
We also mentioned hedge fund sentiment data for these stocks where available. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
11. Franklin BSP Realty Trust, Inc. (NYSE:FBRT)
Dividend Yield as of January 22: 6.84%
Market Cap as of January 22: $1.10 billion
Franklin BSP Realty Trust, Inc. (NYSE:FBRT) is an American real estate investment trust company that is engaged in the origination, acquisition, and management of a varied portfolio of commercial real estate debt. These debts are secured by properties situated across the US. On December 18, the company declared a quarterly dividend of $0.355 per share, which was in line with its previous dividend. With a dividend yield of 6.84% as of January 22, FBRT is one of the dogs of the Russell 2000.
In addition to large-cap companies like International Business Machines Corporation (NYSE:IBM), The Procter & Gamble Company (NYSE:PG), and Colgate-Palmolive Company (NYSE:CL), FBRT can also be a good addition to dividend portfolios.
In the third quarter of 2023, Franklin BSP Realty Trust, Inc. (NYSE:FBRT) reported revenue of $62.4 million, which showed a 24.1% growth from the same period last year. The company ended the quarter with over $411 million available in cash and cash equivalents.
At the end of the third quarter of 2023, 6 hedge funds tracked by Insider Monkey reported having stakes in Franklin BSP Realty Trust, Inc. (NYSE:FBRT), up from 5 in the previous quarter. The overall value of these stakes is over $9.5 million. Among these hedge funds, Leucadia National was the company’s leading stakeholder in Q3.
10. DHT Holdings, Inc. (NYSE:DHT)
Dividend Yield as of January 22: 6.92%
Market Cap as of January 22: $1.76 billion
DHT Holdings, Inc. (NYSE:DHT) s a company engaged in the shipping industry, specifically in the ownership, operation, and management of crude oil tankers. The company primarily focuses on the transportation of crude oil worldwide. It generated $130.3 million in revenues in the third quarter of 2023, which showed a 20.4% growth from the same period last year. The company had nearly $74 million available in cash and cash equivalents at the end of the quarter.
DHT Holdings, Inc. (NYSE:DHT), one of the best dogs of the Russell 2000, has been making regular dividend payments to shareholders for 55 consecutive quarters. It currently offers a quarterly dividend of $0.19 per share for a dividend yield of 6.92%, as of January 22.
The number of hedge funds in Insider Monkey’s database owning stakes in DHT Holdings, Inc. (NYSE:DHT) grew to 26 in Q3 2023, from 22 in the previous quarter. The overall value of these stakes is over $168.5 million. With over 4.3 million shares, Hosking Partners was the company’s leading stakeholder in Q3.
9. Alexander’s, Inc. (NYSE:ALX)
Dividend Yield as of January 22: 8.07%
Market Cap as of January 22: $1.13 billion
Alexander’s, Inc. (NYSE:ALX) is an American real estate investment trust company that owns and manages a diverse portfolio of properties. The company is known for its ownership and operation of high-quality retail and office properties, primarily located in the New York City metropolitan area. It has been rewarding shareholders with dividends since 2010 and it currently offers a quarterly dividend of $4.50 per share. It is among the dogs of the Russell 2000 with a dividend yield of 8.07%, as recorded on January 22.
As of the close of Q3 2023, 6 hedge funds tracked by Insider Monkey reported having stakes in Alexander’s, Inc. (NYSE:ALX), up from 5 in the preceding quarter. The consolidated value of these stakes is more than $28 million.
8. CTO Realty Growth, Inc. (NYSE:CTO)
Dividend Yield as of January 22: 9.11%
Market Cap as of January 22: $378.4 million
An American real estate investment trust company, CTO Realty Growth, Inc. (NYSE:CTO) is next on our dogs of the Russell 2000 list. In the third quarter of 2023, the company posted revenue of $28.4 million, which surpassed analysts’ estimates by $2.96 million. Not only this, but the company’s revenue also saw a 23% growth from the prior-year period. Its total assets at the end of the quarter amounted to over $1.06 billion.
CTO Realty Growth, Inc. (NYSE:CTO) currently offers a quarterly dividend of $0.38 per share and has a dividend yield of 9.11%, as recorded on January 22.
CTO Realty Growth, Inc. (NYSE:CTO) was a part of 12 hedge fund portfolios at the end of Q3 2023, compared with 16 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a collective value of over $26.7 million.
7. Kinetik Holdings Inc. (NYSE:KNTK)
Dividend Yield as of January 22: 9.26%
Market Cap as of January 22: $1.8 billion
Kinetik Holdings Inc. (NYSE:KNTK) is a Texas-based holding company, overseeing various subsidiaries that specialize in offering services related to the gathering, transportation, compression, processing, and treatment of natural gas, natural gas liquids, crude oil, and water for companies involved in these energy sectors. The company offers a quarterly dividend of $0.75 per share and has a dividend yield of 9.26%, as of January 22.
In the third quarter of 2023, Kinetik Holdings Inc. (NYSE:KNTK)’s revenue came in at $330.3 million, which showed a 1.6% growth from the same period last year. During the quarter, the company returned $23.3 million to shareholders through dividends.
Insider Monkey’s database of Q3 2023 showed that 7 hedge funds owned stakes in Kinetik Holdings Inc. (NYSE:KNTK), up from 5 in the previous quarter. The overall value of these stakes is over $15.7 million. Israel Englander’s Millennium Management was the largest stakeholder of the company in Q3.
6. Apollo Commercial Real Estate Finance, Inc. (NYSE:ARI)
Dividend Yield as of January 22: 11.95%
Market Cap as of January 22: $1.65 billion
Apollo Commercial Real Estate Finance, Inc. (NYSE:ARI) is a real estate investment trust company that primarily focuses on investing in and managing commercial real estate debt. On December 12, 2023, the company declared a quarterly dividend of $0.35 per share, which fell in line with its previous dividend. The stock’s dividend yield on January 22 came in at 11.95%, which makes ARI one of the best dogs of the Russell 2000. International Business Machines Corporation (NYSE:IBM), The Procter & Gamble Company (NYSE:PG), and Colgate-Palmolive Company (NYSE:CL) are some large-cap stocks that are popular among investors.
At the end of September 2023, 7 hedge funds in Insider Monkey’s database reported having stakes in Apollo Commercial Real Estate Finance, Inc. (NYSE:ARI), down slightly from 9 in the previous quarter. These stakes are worth over $6.1 million in total.
Click to continue reading 5 Dogs of the Russell 2000.
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Disclosure. None. 11 Dogs of the Russell 2000 is originally published on Insider Monkey.