We’ve written in November and December about two excellent options for investors interested in small-cap funds with a dividend focus. Those are Crawford Small Cap Dividend (CDOFX) and North Star Dividend (NSDVX). What might interest you about such funds?
- Over the long term, small caps outperform large caps
- Over the long term, dividends bolster returns and dampen volatility
- There are hundreds of small stocks which pay dividends, but they’re mostly underfollowed and rarely included in passive ETFs / index funds
Readers who would like to explore beyond our two profiled funds can use the screeners at MFO Premium to find the combination of smallness and yield they find more appealing. To help out folks who aren’t that curious, we’ve prepared a shortlist of funds, scattered between three Lipper groups, that are at least three years old, highlight “dividends” in their name or mission and mostly target small-cap stocks.
In each column, we’ve simple highlighted the funds with the best three-year metrics
|Name||Lipper||APR||Yield||Sharpe||Max DD||Std Dev||Downside Dev||Down month dev||Bear month dev|
|ProShares Russell 2000 Dividend Growers ETF SMDV||Small Core||11.2||2||0.75||-8.6||12.8||8.1||7.1||6.8|
|North Star Dividend NSDVX||Eq Inc||6.1||2.4||0.35||-18.6||12.8||8.9||7.1||6.9|
|Crawford Small Cap Dividend CDOFX||Eq Inc||11.7||1.3||0.7||-16||14.5||9.8||9.2||9|
|Principal Small-MidCap Dividend Income PMDIX||Eq Inc||8.9||2.7||0.5||-17.7||14.7||10.2||9.8||9.7|
|KEELEY Small Cap Dividend Value KSDVX||Small Value||7.4||1.9||0.34||-21.8||17.3||11.4||10.4||9.8|
|WisdomTree US SmallCap Dividend DES||Small Value||9.8||2.6||0.49||-18.3||16.6||11.2||10.5||10.1|
|Royce Dividend Value RYDVX||Small Core||10.9||0.6||0.61||-20||15.3||10.7||10.3||10.1|
|Segall Bryant & Hamill Small Cap Value Dividend WTSVX||Eq Inc||3.2||1.9||0.1||-21.5||17.4||12.1||10.7||10.2|
|WisdomTree US SmallCap Quality Dividend Growth DGRS||Eq Inc||9.4||2.1||0.44||-17.9||17.8||11.8||10.8||10.3|
|Sit Small Cap Dividend Growth SSCDX||Small Core||7.5||1.3||0.38||-19.3||15.6||11.3||10.8||10.6|
Reading that table:
APR measures the fund’s annual percentage returns over the past three years.
Yield measures its income production.
Sharpe ratio is the most widely followed measure of a fund’s risk-return balance.
Maximum drawdown is pure downside, it records the fund’s single worst decline in the past three years
The remaining four metrics measure the funds’ volatility overall (standard dev), downside movements overall (downside dev), downside movements in months where the stock market is below zero (down month dev) and downside movement in months where the stock market is way in red (bear month dev).
The green highlights help make the appeal of Crawford Small Cap Dividend and North Star Dividend immediately apparent: they’re two of the top three funds in almost every measure of downside risk. What about the third, ProShares Russell 2000 Dividend Growers ETF? In general, we don’t profile passive products, either index funds or ETFs, though we’re perfectly happy writing about active ETFs. The strategy for SMDV is to replicate the Russell 2000 Dividend Growth Index. The index is:
The members of the
Russell 2000 Index [which] have increased dividend payments each year for at least 10 consecutive years and meet certain market capitalization and liquidity requirements. The Index contains a minimum of 40 stocks, which are equally weighted. No single sector is allowed to comprise more than 30% of the Index weight