In this article, we discuss 12 best small-cap dividend stocks to buy.
In a report dated September 4, 2025, Reuters mentioned how small-cap American stocks have been slow-moving for a long time. However, a better interest rate environment, robustness of earnings for small-caps, and the direction of the economic landscape will reveal if they are entering a new phase or repeating past mistakes. While the S&P 500 is full of large tech stocks, the Russell 2000 features financial and industrial companies, which have historically trailed tech. The market speculates a comeback for small-caps because there are increasing expectations of interest rate cuts by the Fed. Since small companies often make use of debt financing, they benefit from reduced borrowing costs in a lower interest rate environment.
Reuters quoted Angelo Kourkafas, an Edward Jones senior global investment strategist, who commented that if central banks ease policy more than markets expect, “that can be enough to unleash those discounted valuations and that pent-up demand for the small-cap asset class”.
Mark Hackett, chief market strategist at Nationwide Investment Management Group, also said something similar to Kourkafas:
“We’re now going to see growth rates next year faster for small caps than large caps,”
However, support for small caps is limited. Wells Fargo Investment Institute slashed its outlook for American small-cap stocks in August to “unfavorable,” noting that there is insufficient economic growth for small-caps to outpace their larger counterparts in 2026.
According to a November 4 report from Goldman Sachs Asset Management, American small-cap earnings are indicating signs of a comeback. In Q2 2025, they posted positive earnings after a while, driven by higher sales and margins. It is important to note that 25% of Russell 2000 members have declared growing earnings for at least two quarters in a row. Goldman Sachs estimates that this earnings trajectory will continue into 2026, which means small-caps can possibly top large-cap earnings.
On an international scale, Goldman Sachs noted that earnings for European small-caps are on track for robust growth, and the market has higher expectations for small-caps compared to their larger counterparts. Similarly, Japanese small and mid-cap companies have performed better than large-caps, supported by solid earnings, improved governance, and strong local demand. Moreover, US small-cap stocks are priced about 26% less than large caps, and international small caps are 8% cheaper even though their earnings are estimated to increase faster. This suggests small caps might be undervalued and could present an attractive buying opportunity for long-term investors.
With this outlook in mind, let’s take a look at the best small-cap dividend stocks to buy.
Photo by Dan Dennis on Unsplash
Our Methodology
For this list, we used the Invesco S&P SmallCap High Dividend Low Volatility ETF. To narrow the list, we included only the fund’s holdings with a market cap ranging from $300 million to $2 billion as of December 5. From the ETF’s portfolio, we manually chose small-caps with the highest number of hedge fund holders. We have presented the hedge fund sentiment for the stocks as of Q3 2025, ranking them in ascending order by the number of hedge fund holders.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
12. Sylvamo Corporation (NYSE:SLVM)
Number of Hedge Fund Holders: 20
Dividend Yield as of December 5: 3.69%
Market Cap as of December 5: $1.967B
Sylvamo Corporation (NYSE:SLVM) is one of the best dividend stocks to buy. As of December 5, the average price target for SLVM suggests an upside of 21%, however, the Street high indicates an upside of 54%.
Previously, according to a report by The Fly on November 17, analyst George Staphos at BofA upgraded Sylvamo Corporation (NYSE:SLVM) from Underperform to Buy, while boosting the price target from $41 to $59.
Separately, on November 10, the company’s board agreed upon a limited-term shareholder rights plan, coming into effect at once, to safeguard the shareholder objectives and increase value for them.
The rights plan was approved after Atlas Holdings directed its two board representatives to resign, bringing the 2023 cooperation agreement to an end. Atlas carved a large stake in SLVM during 2022 and currently has a 21.5% position in Sylvamo, comprising 16% beneficial ownership and 5.5% via derivatives. The rights plan protects long-term shareholder value by preventing anyone from quietly accumulating a controlling interest without paying shareholders fairly or giving the board time to assess the situation.
Sylvamo Corporation (NYSE:SLVM) agreed to issue one right per share as of November 20, 2025. Rights will come into practice if someone buys 15% of the company’s shares, or 20% incase of passive investors. If the rights are triggered, other shareholders can buy stock at half price, or Sylvamo can exchange rights for shares. The plan lasts one year, until November 9, 2026, but the board can conclude it at any time at its discretion.
Sylvamo Corporation (NYSE:SLVM), headquartered in Memphis and founded in 1898, produces and sells uncoated paper and pulp in Europe, Latin America, and North America.
11. SunCoke Energy, Inc. (NYSE:SXC)
Number of Hedge Fund Holders: 21
Dividend Yield as of December 5: 7.06%
Market Cap as of December 5: $575.726M
SunCoke Energy, Inc. (NYSE:SXC) is one of the best dividend stocks to buy. As of December 5, the average price target for SXC suggests an upside of 47%, which is similar to the Street high.
Previously, The Fly reported on November 11 that B. Riley maintained a Neutral rating on SunCoke Energy, Inc. (NYSE:SXC), and trimmed the price target from $11 to $10. The firm observed that SunCoke’s adjusted EBITDA, coming in at $59.1 million, topped market expectations. The EBITDA was a result of robust performance in Industrial Services and from Phoenix Global allocating $10 million to SXC.
The company lifted its Industrial Services EBITDA guidance for 2025 to a range of $63 million to $67 million, and the adjusted EBITDA guidance to between $220 million and $224 million. Even though the logistics and Domestic Coke volumes did not meet expectations, the higher guidance was driven by the contributions from Phoenix and anticipated synergies, which were balanced out by initial integration costs, B. Riley told investors.
In a separate press release dated November 18, SunCoke Energy, Inc. (NYSE:SXC) announced that it has extended its cokemaking deal with Cleveland-Cliffs Inc. (NYSE:CLF) for 3 years. The contract stipulates that SXC will offer 500,000 tons of metallurgical coke per year to CLF from its Ohio-based Haverhill cokemaking plant. The new agreement begins on January 1, 2026, with similar terms as the current Haverhill contracts.
SunCoke Energy, Inc. (NYSE:SXC) is an Illinois-based producer of coke in the United States and Brazil, operating through Domestic Coke, Brazil Coke, and Logistics segments.
10. Apogee Enterprises, Inc. (NASDAQ:APOG)
Number of Hedge Fund Holders: 22
Dividend Yield as of December 5: 2.76%
Market Cap as of December 5: $810.588M
Apogee Enterprises, Inc. (NASDAQ:APOG) is one of the best dividend stocks to buy. As of December 5, the average price target for APOG suggests an upside of 27%, however, the Street high indicates an upside of 62%.
Previously, on November 18, analyst Brent Thielman from DA Davidson upgraded Apogee Enterprises from Neutral to Buy, with an accompanying price target of $47.
In a separate update on October 9, the company reported results for the second quarter of fiscal 2026, ending August 30, 2025. Apogee posted a solid quarter, driven by higher revenue and strong showings in Performance Surfaces and Architectural Services.
Apogee’s CEO, Ty R. Silberhorn, commented during the earnings call:
“Our team remained focused on executing our strategy and tariff mitigation plans in what continued to be a dynamic operating environment. We are continuing to build a stronger Apogee, well-positioned for the future. As macroeconomic conditions improve, the growth potential unlocked by our acquisition of UW Solutions, combined with structural cost savings and operational efficiencies from Project Fortify Phase 2, will enhance our ability to deliver sustained long-term value for shareholders,”
Consolidated net sales grew to $358.2 million for the quarter, up 4.6%, bolstered by inorganic sales input of $24.9 million from the UW Solutions acquisition and larger volume in Architectural Services. This was somewhat countered by reduced volume and price in Architectural Glass and a weaker product mix in Architectural Metals. Moreover, APOG returned $11 million to shareholders via dividend payouts.
Apogee Enterprises, Inc. (NASDAQ:APOG) is a Minneapolis-based manufacturer of architectural products and services in the United States, Canada, and Brazil. It has four main divisions: Architectural Metals, Architectural Glass, Architectural Services, and Performance Surfaces.
9. Energizer Holdings, Inc. (NYSE:ENR)
Number of Hedge Fund Holders: 22
Dividend Yield as of December 5: 6.59%
Market Cap as of December 5: $1.246B
Energizer Holdings, Inc. (NYSE:ENR) is one of the best dividend stocks to buy. As of December 5, the average price target for ENR suggests an upside of 26%, however, the Street high indicates an upside of 92%.
Previously, on November 19, Andrea Faria Teixeira assigned a Hold rating on Energizer Holdings, Inc. (NYSE:ENR) and maintained a $23 price target on the stock.
Separately, on November 18, Energizer Holdings, Inc. (NYSE:ENR) reported financial results for the fourth quarter of FY2025. Net sales rose to $832.8 million for the quarter, up 3.4%, supported by acquisition net sales valued at $42.8 million. This was somewhat balanced out by lower organic net sales of 2.2%. ENR reported net earnings in FQ4 of $34.9 million, down from $47.6 million in the same period last year.
The lower net earnings in FQ4 were led by a non-cash pre-tax impairment amount of $5.9 million this year on some patented formulas ENR no longer needs to use, as well as the increase in losses from debt payoff. Additionally, for the quarter, the company shelled out $21.3 million in dividends, which came in at $0.30 per share.
Energizer Holdings, Inc. (NYSE:ENR), based in Saint Louis and founded in 2015, specializes in manufacturing batteries, lighting products, and car and household care items worldwide.
8. H2O America (NASDAQ:HTO)
Number of Hedge Fund Holders: 23
Dividend Yield as of December 5: 3.51%
Market Cap as of December 5: $1.715B
H2O America (NASDAQ:HTO) is one of the best dividend stocks to buy. As of December 5, the average price target for HTO suggests an upside of 27%, however, the Street high indicates an upside of 38%.
Previously, according to an update dated November 19, H2O America’s subsidiary, San Jose Water Company, along with three other water utilities, was allowed to extend their 2026 Cost of Capital filing until May 1, 2027. The Executive Director of the California Public Utilities Commission (CPUC) allowed this deferment. Delaying the filings for one year allows these companies and the CPUC to relieve admin processing costs.
Tanya Moniz-Witten, the San Jose Water Company President, commented:
“This approval provides greater clarity and stability for our customers through 2027. We deeply appreciate the CPUC’s support and timely response, and we are confident this positions us well for continued success.”
Separately, H2O America (NASDAQ:HTO) reported its Q3 2025 financial results on October 27. To increase HTO’s presence in Texas, the company made headway on acquiring Quadvest, one of the biggest water and wastewater utilities in the area. Another development to boost its presence in Texas was the deal to obtain the Cibolo Valley wastewater system. HTO’s GAAP net income for Q3 came in at $45.1 million, up 17% compared to the prior-year quarter. Diluted EPS and operating revenue for the quarter stood at $1.27 and $240.6 million, an increase of 9% and 7% compared to the same quarter last year, respectively.
H2O America (NASDAQ:HTO) is a water utility company that produces, treats, and distributes water to homes and businesses in California, Connecticut, Maine, and Texas.
7. J&J Snack Foods Corp. (NASDAQ:JJSF)
Number of Hedge Fund Holders: 23
Dividend Yield as of December 5: 3.52%
Market Cap as of December 5: $1.771B
J&J Snack Foods Corp. (NASDAQ:JJSF) is one of the best dividend stocks to buy. As of December 5, the average price target for JJSF suggests an upside of 21%, however, the Street high indicates an upside of 43%.
Priorly, on November 18, Benchmark analyst Todd Brooks assigned a Buy rating on J&J Snack Foods Corp. (NASDAQ:JJSF), along with a price target of $130.
Separately, the company reported its fourth quarter results for FY25 on November 17. For the quarter, net sales came in at $410.2 million, a drop of 3.9% on a year-over-year basis. More than 50% of the sales dropped in the Frozen Beverage segment, which produced robust results last year, driven by Inside Out 2’s unusually strong volumes. The company’s operating income for Q4 stood at $11.5 million, down from $39.8 million in the preceding-year quarter. Meanwhile, the diluted EPS came in at $0.58, compared to $1.52 in the same quarter last year.
Moreover, on November 20, J&J Snack Foods Corp. (NASDAQ:JJSF) announced a quarterly per-share dividend of $0.80. The dividend is distributable on January 6, 2026, to shareholders listed by December 16, 2025.
Dan Fachner, Chairman, President, and CEO, commented during the earnings call:
“Looking ahead, we have several major commercial programs launching in fiscal 2026 and our innovation pipeline remains robust, with a significant emphasis on better-for-you attributes. In addition, we have initiated a comprehensive business transformation program designed to generate at least $20 million of annualized operating income once all initiatives are implemented. The plant consolidation component of the program is underway and resulted in approximately $24 million of non-recurring charges in the fourth quarter. With our strong balance sheet, including $106 million in cash and no debt, we are exceptionally well positioned to drive sustainable growth and create long-term value for our shareholders while navigating the evolving consumer environment. We see compelling value in our shares and expect to execute aggressively against our repurchase authorization.”
J&J Snack Foods Corp. (NASDAQ:JJSF) manufactures and sells a range of snacks and frozen drinks in the United States, Mexico, and Canada. Its products include soft pretzels, frozen treats, churros, baked goods, handheld snacks, and ICEE beverages.
6. John Wiley & Sons, Inc. (NYSE:WLY)
Number of Hedge Fund Holders: 23
Dividend Yield as of December 5: 4.38%
Market Cap as of December 5: $1.724B
John Wiley & Sons, Inc. (NYSE:WLY) is one of the best dividend stocks to buy. On November 25, WLY disclosed that it has entered a partnership with IQVIA Holdings Inc. (NYSE:IQV) to provide a trusted solution to enforce the Clinical Outcome Assessment (COA) execution.
Through this partnership, COA instruments are easily available to pharmaceutical and research organizations. This one-stop solution makes the COA process easier, easing vendor-related workflows, providing quality assurance, and guaranteeing that the COA implementation aligns with scientific guidance.
Normally, COA licensing involves multiple vendors, including publishers for instrument licenses, language translation services, and implementation consultants. This is a lengthy process, taking months in some cases, which halts trial timelines and can potentially cause issues in quality assurance or compliance. This partnership between Wiley and IQVIA simplifies the process by providing a combined COA licensing and implementation solution in one contract. It is overseen by a rightsholder that endorses scientific accuracy and protects copyrights.
Phase one has five Wiley-managed COA tools offered as complete solutions, and the plan is to expand this to Wiley’s broader lineup of more than 100 COAs, along with full lifecycle services, by the end of 2026. These instruments assist in clinical research for specialized fields, including anxiety and depression, pediatric cancer functional status, lupus-related organ damage, and physical sexual maturity review.
In collaboration with IQVIA, John Wiley & Sons, Inc. (NYSE:WLY) provides qualified instruments with in-built support for translation, digital migration, and implementation within a singular integrated solution. This collaboration indicates Wiley’s expertise in integrating dependable research resources into clinical platforms that serve pharmaceutical and biotech companies.
John Wiley & Sons, Inc. (NYSE:WLY) is a New Jersey-based publisher that offers reliable content, data insights, and learning services across the United States and internationally.
5. HNI Corporation (NYSE:HNI)
Number of Hedge Fund Holders: 25
Dividend Yield as of December 5: 3.32%
Market Cap as of December 5: $1.876B
HNI Corporation (NYSE:HNI) is one of the best dividend stocks to buy. As of December 5, the average price target for HNI suggests an upside of 65%, however, the Street high indicates an upside of 78%.
On December 5, HNI and Steelcase Inc. (NYSE:SCS) disclosed that the shareholders of the former have agreed to vote for the issuance of HNI common shares to Steelcase common stockholders under the Merger Agreement. Meanwhile, Steelcase shareholders have voted for the adoption of the Merger Agreement and signed off on the first merger that was decided upon. The companies agreed to merge on August 3, 2025.
An overwhelming majority of HNI Corp’s and Steelcase’s shareholders backed the merger proposals by each company. A complete report will be provided, mentioning the details of the voting results, on Form 8-K submitted to the US SEC by HNI and SCS. The deal is set to conclude on December 10, 2025.
Previously, on November 5, HNI Corporation declared a dividend per share of $0.34 on its common units. The dividend was distributed on December 1 to shareholders listed as of November 17. The company pays dividends on a quarterly basis.
HNI Corporation (NYSE:HNI) designs, manufactures, and sells office furniture and residential building products in the United States and Canada.
4. Upbound Group, Inc. (NASDAQ:UPBD)
Number of Hedge Fund Holders: 27
Dividend Yield as of December 5: 8.27%
Market Cap as of December 5: $1.092B
Upbound Group, Inc. (NASDAQ:UPBD) is one of the best dividend stocks to buy. As of December 5, the average price target for UPBD suggests an upside of 48%, however, the Street high indicates an upside of 144%.
Priorly, on November 21, Vincent Caintic from BTIG maintained a Buy recommendation on Upbound Group, Inc. (NASDAQ:UPBD) and assigned a target price of $28 to the shares.
Separately, on October 30, the company reported its financial results for Q3 2025. During the quarter, consolidated revenues increased 9% on a year-over-year basis to $1,164.7 million, supported by the Brigit acquisition, as well as greater rentals, fees revenue, and merchandise sales numbers. UPBD’s GAAP net earnings came in at $13.2 million, down from $30.9 million in the same quarter last year.
During the quarter, Upbound refinanced its term loan. The updated agreement raises the loan to $875 million, which strengthens liquidity and prolongs the maturity to 2032. The company maintains a solid financial standing and concluded the quarter with liquidity of over $360 million, net debt coming in at $1.5 billion, and a 2.9x net leverage ratio.
Moreover, on December 4, Upbound Group, Inc. (NASDAQ:UPBD) declared a quarterly dividend of $0.39 per share. The dividend is payable on January 6, 2026, to shareholders listed as of December 17, 2025.
Upbound Group, Inc. (NASDAQ:UPBD) provides household goods on a lease-to-own basis in the United States, Puerto Rico, and Mexico. The business is divided into four segments: Rent-A-Center, Acima, Mexico, and Franchising.
3. The Greenbrier Companies, Inc. (NYSE:GBX)
Number of Hedge Fund Holders: 30
Dividend Yield as of December 5: 2.73%
Market Cap as of December 5: $1.442B
The Greenbrier Companies, Inc. (NYSE:GBX) is one of the best dividend stocks to buy. As of December 5, the average price target for GBX suggests a downside of 11%, however, the Street high indicates an upside of 13%.
Priorly, on November 21, Goldman Sachs analyst Andrzej Tomczyk assigned a Sell rating on The Greenbrier Companies, Inc. (NYSE:GBX), along with a $38 price target.
Separately, on October 28, the company reported financial results for the fourth quarter of fiscal 2025. GBX had net earnings of $37 million, which comes in at $1.16 per diluted share. During fiscal 2025, lease fleet growth at Greenbrier stood at approximately 10%, which equals 17,000 units, with a utilization rate of 98%.
In the fiscal fourth quarter, the company secured 2,400 new railcar orders valued at over $300 million and completed deliveries of 4,900 units, resulting in a backlog of 16,600 railcars worth nearly $2.2 billion by August 31, 2025. GBX also brought back 10,000 shares, amounting to $470,000 in FQ4. The company also made its 46th quarterly dividend payout on December 3, 2025, which came in at $0.32 per share.
The Greenbrier Companies, Inc. (NYSE:GBX) designs and builds freight railcars across North America, Europe, and South America for railroads, leasing firms, shippers, and other transportation companies.
2. Select Medical Holdings Corporation (NYSE:SEM)
Number of Hedge Fund Holders: 30
Dividend Yield as of December 5: 1.68%
Market Cap as of December 5: $1.849B
Select Medical Holdings Corporation (NYSE:SEM) is one of the best dividend stocks to buy. As of December 5, the average price target for SEM suggests an upside of 34%, however, the Street high indicates an upside of 41%.
Previously, on November 5, analyst Ben Hendrix from RBC Capital kept a Buy call on Select Medical Holdings, along with a $20 price target.
In another business update, dated October 30, the company reported its Q3 2025 results. Select Medical’s revenue rose to $1,363.4 million, up 7.2% on a year-over-year basis. The company’s revenue increased in its critical illness recovery hospital, the rehabilitation hospital, and the outpatient rehabilitation segments by 4.6%, 16.2%, and 4.3% during the September quarter, respectively. The company also paid a cash dividend of $0.0625 per share on November 25.
The company’s board also announced a common share repurchase initiative with a capacity of up to $1 billion. The share repurchase program was extended from December 31, 2025, to December 31, 2027.
For FY2025, Select Medical estimates total revenue generation of $5.3-$5.5 billion, with Adjusted EBITDA ranging between $510 million and $530 million, and diluted EPS falling between $1.14 and $1.24.
Select Medical Holdings Corporation (NYSE:SEM) is an operator of hospitals and outpatient clinics across the United States, and its specializations include heart and lung conditions, neurological and orthopedic issues, cancer, work-related injuries, pediatric care, and sports rehab.
1. Cogent Communications Holdings, Inc. (NASDAQ:CCOI)
Number of Hedge Fund Holders: 31
Dividend Yield as of December 5: 15.55%
Market Cap as of December 5: $964.965M
Cogent Communications Holdings, Inc. (NASDAQ:CCOI) is one of the best dividend stocks to buy. As of December 5, the average price target for CCOI suggests an upside of 38%, however, the Street high indicates an upside of 180%.
Previously, on November 12, Jonathan Atkin from RBC Capital assigned a Hold rating on Cogent Communications Holdings, Inc. (NASDAQ:CCOI) with a $23 price target.
Separately, Cogent Communications disclosed on November 17 that it has resumed the share repurchase initiative. The stock buyback program enables the company to buy back stock, but it does not have to purchase a specified amount.
Earlier, the company reported its financial results for the third quarter of 2025. The Q3 service revenue came in at $241.9 million, down 1.7% from the last quarter and 5.9% from the prior-year quarter. Moreover, on-net revenue for Q3 stood at $135.3 million, up 2.2% from the preceding quarter and down 0.9% compared to the third quarter in 2024. Off-net revenue came in at $95.1 million, down 14.5% compared to the prior-year quarter, while Wavelength revenue was $10.2 million for Q3 2025, up 92.5% year-over-year. As of September 30, 2025, customer connections were 118,279, down 6.4% from the same quarter in 2024 and 0.4% from Q2 2025.
Cogent Communications Holdings, Inc. (NASDAQ:CCOI) offers high-speed internet, private networks, and data center space worldwide to small and medium-sized businesses, service providers, and other organizations.
While we acknowledge the potential of CCOI to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than CCOI and that has 100x upside potential, check out our report about this cheapest AI stock.
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