Small caps are beating the S&P 500 in 2026. These stocks pay a dividend
The year is off to a rocky start for stocks, but small caps have managed to outperform their larger counterparts – and a few of those names also happen to offer dividends. A sharp sell-off in software stocks has driven the S & P 500 into the red in 2026, with the broad market index losing 0.5%. In the same period, the Russell 2000 is up 4%. That outperformance shouldn’t be your cue to go all-in on small stocks. The Russell 2000 brings a unique set of risks when compared to larger names. For starters, small caps are very sensitive to the economy and interest rates, and are less diversified. The companies also tend to borrow money, and when rates spike, their financing costs will rise. They may also have high dividend payout ratios, meaning they distribute a big chunk of their earnings to shareholders in the form of dividends. This means that when times get difficult, smaller companies may face pressure to cut or suspend their income payments. Size matters when it comes to dividends – and giants like Coca-Cola, McDonald’s and IBM are the go-to for income-seeking investors who are counting on reliable payments. That said, for investors who are willing to take the risk and capture a combination of income and appreciation, some stock in the Russell 2000 may fit the bill. CNBC screened the small-cap benchmark for stocks that have a market cap above $1 billion, an analyst consensus rating of buy or strong buy and that pay a dividend. Spectrum Brands made the screen. The company makes Cutter insect repellent and Nature’s Miracle pet products. Shares are up 27% in 2026, and the current dividend yield is 2.5%. Spectrum reported its fiscal first quarter results on Thursday, beating the Street’s expectations on the top and bottom lines. The company also reiterated full-year, 2026 guidance, calling for revenue growth to range from flat to low single digits on a year-over-year basis, versus the FactSet consensus call for an increase of 0.6%. “We are pleased with our results this quarter, particularly that our most profitable and largest Adjusted EBITDA contributing business, Global Pet Care, returned to growth,” said CEO David Maura in a statement. Concentra Group , a provider of occupational health services, also made the cut. Shares are up almost 20% in 2026, and the stock has a current dividend yield of about 1.1%. The company recently shared preliminary figures for its fourth quarter, seeing adjusted earnings of 28 cents per share on revenue of $539.1 million. Those figures are ahead of the FactSet consensus call for 23 cents per share on $532.1 million in revenue. Formal results are due later this month. “Overall, we view the results positively and above investor expectations,” said Mizuho analyst Ann Hynes in a report last week. “We continue to believe CON’s positioning, M & A strategy and the company’s low exposure to risks in Washington, provides an attractive long-term investment opportunity,” she added. Concentra has shifted back to its core acquisition strategy of finding practices with one to five occupational health centers, CFO Matthew DiCanio said in a November earnings call. To illustrate the point, Concentra last month announced the acquisition of assets of Reliant Immediate Care in California, including locations in Los Angeles. Other stocks that emerged on the screen include WD-40 , Upbound Group , Select Water Solutions and U.S. Physical Therapy . —CNBC’s Nick Wells contributed reporting.
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