The Motley Fool

Two small-cap dividend stars I’d buy to supercharge my portfolio

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Hollywood Bowl
Image: Hollywood Bowl: Fair use

It’s no secret that small-cap stocks have the potential to deliver amazing capital gains. However, if you can find fast-growing smaller companies that also pay dividends, the results can be even more explosive. With that in mind, here are two high-growth dividend prospects I believe look attractive right now.


£222m market capitalisation Acal (LSE: ACL) designs, manufactures and distributes customised electronic products and solutions to businesses across a range of industries. The stock is up around 30% over the last year, but I believe there could be further gains on the horizon, given the company’s momentum and attractive valuation.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Acal released a trading update for the six months to 30 September this morning, and the numbers look impressive. First-half revenue increased 21%, or 15% on a constant currency basis, comprising organic growth of a healthy 9%, and 6% from acquisitions. Growth was driven by new project wins and product cross selling, and enhanced by favourable market conditions, particularly in Europe. Management advised that it is “confident of making good progress through the rest of the year, continuing its established strategy of seeking high quality revenue opportunities in our target markets, along with value-enhancing acquisitions.”

The market is clearly happy with the update, and the shares have surged 6% today. However, on a forward P/E ratio of just 15.4, the shares remain attractively valued in my opinion. City analysts have pencilled in sales growth of 10% this year, as well as a dividend payout of 9.25p, a yield of 2.8% at the current share price. Those estimates make the small-cap stock worthy of a closer inspection, in my view.

Hollywood Bowl

Another small-cap dividend stock that looks appealing right now is ten-pin bowling centre operator Hollywood Bowl (LSE: BOWL). The £280m cap company came to the market last September, floating at an IPO price of 160p. Since then, the shares have risen to 185p, a gain of a respectable 16%. Could there be more gains to come? Quite possibly, in my opinion.

The group released an upbeat trading statement recently, advising that it had delivered a “strong financial and operational performance” which is expected to result in earnings being “marginally ahead” of the board’s expectations. Revenue for the full year increased 9%, including like-for-like revenue growth of 3.5%.

The company also stated that it is in a strong financial position, and that it is “considering returning capital” to shareholders. What kind of dividend yield can investors expect? City analysts currently forecast a dividend payout of 5.8p for FY2017, equating to a dividend yield of 3.1% at the current share price.

On estimated earnings of 10.9p per share for the year just passed, Hollywood Bowl currently trades on a P/E of just under 17. That valuation looks reasonable to me. With the company focused on expanding its number of centres, refurbishing its existing sites, and improving the customer experience, Hollywood Bowl could be worth a closer look, in my view.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has recommended Hollywood Bowl. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.