4 Outsized Dividends From 4 Small Cap Stocks

Core Insights - Small-cap stocks are showing signs of recovery, which may indicate a bullish trend as the market approaches 2026 [3][4] - The article discusses four small-cap stocks with dividend yields ranging from 7.1% to 13.3% [5] Small-Cap Market Overview - Small-cap stocks have underperformed compared to larger stocks over the past decade, with a brief rally during the COVID reopening in 2020 [3] - Factors such as rising interest rates and a shift towards safer mega-cap stocks have contributed to the underperformance of small caps [3][4] - The recent focus on potential Federal Reserve rate cuts has led to increased interest in small-cap stocks [3][4] Featured Small-Cap Stocks - Nuveen Churchill Direct Lending (NCDL): Offers a 13.0% dividend yield and is part of the business development companies (BDCs) sector, which is required to distribute at least 90% of earnings as dividends [5][6] - UWM Holdings (UWMC): Provides a 7.1% dividend yield and is the largest home mortgage lender in the U.S., focusing on wholesale lending [11][12] - Redwood Trust (RWT): Has a 12.7% dividend yield and is involved in jumbo residential mortgages and single-family rental loans, with a focus on improving earnings in the coming years [15][16] - Franklin BSP Realty Trust (FBRT): Offers a 13.3% dividend yield and primarily deals in commercial mortgage-backed securities, with a recent acquisition expected to enhance its earnings potential [19][21] Financial Performance and Outlook - NCDL's high yield is supported by regular and supplemental dividends, although the latter have been replaced with a traditional payout schedule [6][10] - UWMC is positioned to benefit from lower mortgage rates, with plans to scale operations as rates decline [12][13] - Redwood Trust has been repurchasing shares and is on "dividend growth watch," indicating potential for future dividend increases [18] - FBRT's recent acquisition of NewPoint Holdings is expected to contribute positively to its distributable earnings, despite concerns over dividend coverage [21][22]