• Investing stocks could be a better way to beat inflation
  • You don’t need to invest in blue chips to earn dividends
  • A list of 10 small caps with dividends

In 2021, the S&P/ASX 200 Index had an average dividend yield of 2.8%.

It’s below historical standards, but a lot more than what you could earn on a term deposit at the time (12-month TDs were being offered at close to zero).

Rates have gone much higher since, and 1-year term deposits are presently being offered north of 3.5%.

But with inflation at 7.3%, you’re still looking at a negative real return.

You stand a much better chance of beating inflation by investing in stocks because over the last 10 years, the ASX 200 Index has an average total return of 9.3% each year (combining both capital gains and dividends).

At the moment, blue chip Energy and Mining stocks provide decent dividends that outmatch the CPI rate.

In the last financial year, BHP (ASX:BHP) paid close to a 12% dividend yield, while coal stock New Hope (ASX:NHC) paid around 8%.

This could be counter logic to some, but you don’t need to be investing in large caps to be getting those dividends.

Many small caps on the ASX do in fact offer some neat dividend yields.


Small caps with neat dividend yields

We’ve listed here for you the top 10 paying small capped dividend stocks.

Source: Commsec.

Please note: if a stock usually pays a quarterly divided, its yield may show up as zero if it’s determined that it was supposed to pay out profit this quarter but has not yet done so.


Code Name Business Dividend yield % Current dividend
RKN Reckon Ltd Software 3.90% $0.57
ALG Ardent Lesiure Theme parks 0.00% $0.46
SFC Schaffer Corporation Diversified 5.00% $0.45
ACL Australian Clinical Labs Pathology services 10.20% $0.41
NCK Nick Scali Furniture 6.90% $0.35
BBC BNK Banking Corp Banking 0.00% $0.34
RBD Restaurant Brands NZ Restaurants 4.60% $0.30
EYE Nova Eye Eye disease tech -- $0.29
ABA Auswide Bank Banking 7.60% $0.21
PPM Pepper Money Fintech 6.70% $0.05
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Reckon (ASX:RKN)

Reckon paid out 57c a share in the last financial year for a 3.9% yield.

The company develops business accounting and payroll software for small to larger sized businesses.

It also has a personal wealth management platform branded as Reckon One.

Reckon has recently offloaded its Practice Management Accountant Group, which was sold for $100m effective 1 August.

The two remaining operating divisions are targeting small businesses, accounting, bookkeeping firms and legal firms.

Over 117,000 people use Reckon’s cloud SME products, and over 400,000 employees get paid in Australia via Reckon products.

Ardent Leisure (ASX:ALG)

Ardent owns and operates a portfolio of assets of entertainment and leisure businesses, including Dreamworld, White Water World and SkyPoint on the Gold Coast.

An accident at Dreamworld in which four people were killed and others injured on the Thunder Rivers Rapids ride in 2016 severely damaged the public perception of ALG.

Furthermore, theme parks were materially impacted throughout the Covid-19 pandemic.

However, the company is positioned to capitalise on recovering domestic and international tourism.

In June, ALG shareholders backed a proposal to sell its US entertainment business Main Event to restaurant and entertainment business Dave & Busters (Nasdaq:PLAY) for US$835m ~$1.1 billion.

Nick Scali (ASX:NCK)

Popular furniture retailer Nick Scali has been paying dividends for years.

In FY21, its profit dropped 5% to $80.2m as it faced a number of challenges with over 55% of its store network closed for three months in the first half of the year, and widespread disruption to its supply chain in the second half of the year.

Despite these challenges, Nick said it was still able to deliver a strong result and end the year with a significant order bank which will translate to further revenue in FY23.

The company has plans to expand its ANZ footprint by opening 85 new showrooms across both markets, with the recent acquisition of Australian sofa retailer, Plush-Think Sofas, the first step towards that goal.

Australian Clinical Labs (ASX:ACL)

ACL is a leading Australian private provider of pathology services, and is one of the largest private hospital pathology businesses nationally, with over 90+ hospitals serviced.

The company also services 31 specialist skin cancer clinics, diagnosing around 15% of all reported melanoma cases in Australia.

In September, the company made its debut on the ASX 300 list.

ACL caused some concerns in late October when it reported that Medlab Pathology, a pathology business it acquired in December 2021, has experienced a notifiable cyber incident involving personal information of some of Medlab’s patients and staff.

ACL is currently working with the relevant authorities to remediate the issue.

Restaurant Brands NZ (ASX:RBD)

This is acompany that operates and owns the master franchising rights for the Carl’s Jr., KFC, Pizza Hut, and Taco Bell brands in New Zealand.

RBD had a really good Q3, with total sales increasing to $322.2 million on the pcp.

RBD says it is still experiencing significant cost inflation across all regions as worldwide inflationary pressures have continued from the last quarter.

The company says it will continue to implement price increases where possible in response to these increased costs.


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