SmallCap Dividends Are Not Created Equal

SmallCap Dividends Are Not Created Equal by Ben McMillan, Portfolio Manager, Ramsey Quantitative Systems Inc

Conventional wisdom has long held that dividends are a key tenet of investing. Benjamin Graham, himself, was unwavering in his view that a company’s record of paying a dividend was perhaps the best signal of “quality.”1 As investors have increasingly begun to favor simplicity and quality, dividends have emerged as a simple solution to both. We take a closer look at the practice of using dividends as the only investing criteria, particularly among small-cap companies, and risks and implications that arise as a result.

Arguments in favor of a dividend-centric approach to investing generally center around two key rationales for why dividends are an important...