BofA recommends four small-cap dividend plays

BofA has named four small-cap stocks with dividends yields outpacing Treasuries, reports CNBC. While small caps have more to lose from tariffs and macroeconomic uncertainty, they remain cheap relative to their large-cap peers, notes BofA Equity Strategist and Head of U.S. Small-/Mid-Cap Strategy Jill Carey Hall. The small-cap-tracking Russell 2000 index is still about 15% off its recent high, having lost about 4.5% since the beginning of the year.

Companies that focus on returning capital to shareholders have historically shown superior returns in the small-cap stock segment during both market downturns and recoveries, Hall argues. She picked four stocks from the Russell 2000 whose dividend yields are higher than the 10-year Treasury yield (4.39%). 

Ryman Hospitality Properties is a lodging and hospitality REIT that specializes in upscale convention center resorts.

Its financial results for the first quarter beat expectations, CNBC reported. The company posted adjusted funds from operations of $2.08 per share, versus analysts' forecast of $1.68 per share. Revenue rose 11.2% year over year to $587.3 million, beating the consensus estimate of $548.4 million. Net income was up 47% at $63 million.

Year to date, Ryman Hospitality shares are off 8%, trading at $95.90 per share currently. The stock offers an annual dividend yield of 4.8%.

Sabra Health Care is a REIT investing in skilled nursing, senior housing and behavioral health facilities. The sector is expected to grow as the population ages, CNBC writes. The number of Americans aged 65 and older will increase from 58 million in 2022 to 73 million by 2030, their share of the population expanding from 17% to 21%, according to a forecast by the U.S. Census Bureau.  

The company's revenue in the first quarter increased 10% year over year to $183.5 million, which was $5 million above analysts' expectations, CNBC reported. Net income rose 53% to $40.3 million. Sabra Health Care has $1.1 billion of liquidity, including available borrowings under a revolving credit facility of $917.3 million.

Since the beginning of the year, Sabra Health Care shares are up 2.6% at $17.80 per share. The annual dividend yield is 6.8%. In mid-May, a Scotiabank analyst raised his target price on the stock from $18 to $19 per share and reiterated his «buy» recommendation. 

Northern Oil and Gas has an unconventional business model, where it invests in minority interests in wells operated by other energy companies. This allows it to generate revenue without incurring the high fixed costs and operational risks associated with drilling.

For the first quarter, Northern Oil and Gas reported an 8% year-over-year increase in revenue to $602.1 million, solidly beating expectations of $559.5 million, as reported by Investing.com. Barrel of oil equivalent production was up 13% year over year.

Although the company has strong financials, year to date its shares have fallen 25% to $27.80 each. The stock offers an annual dividend yield of 6.4%.

NorthWestern Energy has a diversified business: It is a utility company that provides electric and gas services, and it owns and operates assets such as power plants, transmission lines, and natural gas pipelines. 

In the first quarter, the company reported a 1.9% decline in revenue to $466.6 million versus a year earlier. At the same time, its net income rose 18% year over year to $76.9 million, or $1.25 a share. 

Since the beginning of the year, NorthWestern Energy shares are down 1.6% at $52.50 apiece now. The stock offers an annual dividend yield of 5%.