Two small caps with sustainable high yields

Article Excerpt

Dividend investors tend to avoid small cap stocks over concerns that they are riskier than bigger firms. However, you can cut than risk with high-quality firms such as Leon’s and Russel. Both are leaders in their markets. LEON’S FURNITURE LTD. $22 is a buy. The retailer (Toronto symbol LNF; High-Growth Payer Portfolio, Consumer sector; Shares outstanding: 68.1 million; Market cap: $1.5 billion; Dividend yield: 3.3%; Dividend Sustainability Rating: Average; www.leons.ca) operates 302 stores that sell furniture and home appliances, mainly under the Leon’s, The Brick, and Appliance Canada banners. With the January 2024 payment, the company raised your quarterly dividend by 12.5%, to $0.18 a share from $0.16. The new annual rate of $0.72 yields a solid 3.3%. In May 2023, Leon’s announced it would create a real estate investment trust (REIT) and transfer some of its holdings, which total 429 acres across the country. Leon’s also plans to re-develop a 40-acre plot of its land in central Toronto. Under the proposal, the property will house its new…