One of the difficult aspects of recommending stocks to a large audience is finding stocks that have ample market cap and liquidity to handle a possible surge in volume from a new recommendation.
If I make a recommendation in The Oxford Income Letter, thousands of investors might conceivably buy hundreds of shares each. If a stock doesn’t normally trade enough volume, all that buying activity could move the stock price higher.
[ad#Google Adsense 336×280-IA]There are many times when I’ll find a stock that meets various criteria, only to discover that it has a tiny market cap or only trades 100,000 shares a day.
Occasionally, just to stay on top of what’s going on in all areas of the market, I take a look at very small stocks.
[Recently], I discovered several interesting dividend plays that I’d love to recommend… but can’t.
Please note that these are not recommendations to buy the stock.
I haven’t looked at them closely enough. I’m giving you the information merely as a point to start your own research.
- Textainer Group Holdings (NYSE: TGH): It has a respectable $2.1 billion market cap, but trades fewer than 175,000 shares a day. The Bermuda-based shipping container company pays a healthy 4.9% dividend yield and has raised the dividend every year for seven years. Its annual dividend raise has averaged more than 15% over the past five years.
- Houston Wire and Cable Company (Nasdaq: HWCC): A provider of cable and wire products, this could be a good play on a recovering economy. It pays a 4% yield and has raised the dividend each of the past two years.
- Pope Resources (Nasdaq: POPE): This timber company trades very few shares, fewer than 2,000 per day on average. It pays a 3.9% yield. It just raised the dividend 18% and has boosted the dividend consistently since 2009. It is a limited partnership, so the tax on its distributions is more complicated than a typical dividend stock, but may have some tax advantages.
- Harleysville Savings Financial Corp. (OTC: HARL): Another stock that trades fewer than 2,000 shares a day, the Pennsylvania-based savings bank pays a robust 5.1% dividend yield. The company generally raises the dividend by a penny per share roughly every year, though there was no increase between 2009 and 2012.
- TransMontaigne Partners LP (NYSE: TLP): This master limited partnership transports oil and gas along the Gulf Coast and Mississippi and Ohio Rivers. It trades just 37,000 shares per day, but offers investors a 5.9% yield and has raised the dividend every year for 10 years, though by a small amount each year.
Because of their sizes, these five stocks are names you won’t likely find in many people’s portfolios, nor will you hear them talked about in the media. But after conducting your own research, you may find them attractive candidates for a yield-hungry portfolio. Just be aware that the low volume and liquidity may make it difficult to get out of the position at a good price should you need to do so in a hurry.
Source: Wealthy Retirement