Investing in small-cap stocks often means facing volatility. Smaller companies are more susceptible to swings in the overall economic environment or disruption in their core business, while blue chips are big, lumbering behemoths that aren’t fazed by much.
So if you believe in the current bull market and economic recovery, you’ll want to consider staking out a claim in small caps.
Think of these picks like small, agile speedboats, and bigger stocks as massive ocean liners. If you’re taking a nice, leisurely voyage across rough seas, then you want to be on the Queen Mary. But if you’re just looking for a fast and fun joyride, small caps are your ticket.
That’s not to say you always have to settle for wild swings and big risks in these little guys, though. There are a number of small-cap stocks that have substantial dividend payouts that add a bit of security and stability to your portfolio. And when you add up the potential share appreciation with a 5% dividend, the total returns can be very impressive.
Here are five such small caps to consider right now: Senior Housing Properties Trust (NYSE:SNH), Two Harbors (NYSE:TWO), AllianceBernstein Holding (NYSE:AB), Aircastle Limited (NYSE:AYR) and Macquarie Infrastructure Company (NYSE:MIC).