Kiplinger

7 Great High-Yield Dividend Stocks That Nobody Talks About

It's hard to believe given how violently stocks sold off last quarter, but most corners of the market are already optimistically priced again. The Standard & Poor's 500-stock index is just 6% below its all-time highs and trades at a sky-high price-to-sales ratio of 2.1.

It's the same story in the income space. After topping out late last year, rising bond prices have clipped bond yields. As recently as late October, the 10-year Treasury yielded 3.2%. Today, it yields less than 2.7%. And most of the larger "bond substitutes" among large-cap dividend stocks and real estate investment trusts (REITs) don't yield much better.

If you want a respectable yield, you must hunt for it among smaller names that Wall Street tends to overlook. It's not for the faint of heart; small-cap stocks have less research coverage and tend to be more volatile.

But with this increased volatility comes the possibility of vastly better returns. A study by Dimensional Fund Research covering 1926-2016 found that small-cap value stocks returned 15.2% per year on average, nearly 50% better than the 10.3% returned by the S&P

*Distribution rate can be a combination of dividends, interest income, realized capital gains and return of capital, and is an annualized reflection of the most recent payout. Distribution rate is a standard measure for CEFs.

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