KUALA LUMPUR (Feb 5): An attractive dividend yield isn’t something that only large-market capitalisation (cap) stocks can offer; there are also small- and mid-cap counters paying decent dividends too.

The Edge has compiled a list of small and mid-cap stocks that have a forward dividend yield of more than 5% on Bloomberg.

Among mid-cap stocks with a market cap of between RM500 million and RM1 billion, Formosa Prosonic Industries Bhd (KL:FPI) offers the highest dividend yield at 8.3%, followed by SHL Consolidated Bhd (KL:SHL) at 8.1%, as well as Sentral REIT (KL:SENTRAL) at 7.7% and APM Automotive Holdings Bhd (KL:APM) at 7.6%.

Other than real estate investment trusts (REITs), it is noteworthy that the top yielding mid-cap companies — Formosa Prosonic, SHL Consolidated and APM Automotive — have robust balance sheets, with net cash exceeding 50% of their market cap. These stocks are not tracked by analysts.

For one, Malacca Securities Sdn Bhd head of research Loui Low cautioned that electronics manufacturing services (EMS) provider Formosa Prosonic faces potential downside risks due to its high concentration of just two customers, who may withdraw orders amid supply chain reshufflings.

Among mid-cap stocks, Pantech Group Holdings Bhd’s (KL:PANTECH) prospects seem robust, mainly supported by global oil and gas maintenance works, said Low.

In addition, Pantech intends to list its manufacturing business, with the listing exercise expected to unlock value and drive stronger growth for the segment. The company has declared consistent dividends over the past 11 years — its payout ratio stands at nearly 50%. Its forward dividend yield is 6.6% currently.

KIP REIT (KL:KIPREIT) offers a 7.6% dividend yield — higher than the top-yielding large-cap REITs paying 6.9% to 7.4%. According to Low, KIP REIT's recent portfolio expansion into retail and industrial properties has been accretive and adds up to its net property income.

Meanwhile, Apex Securities head of research Kenneth Leong expects Wellcall Holdings Bhd’s (KL:WELLCAL) financial performance to remain strong due to its diverse client base (totalling over 200) and the ongoing expansion of its third manufacturing plant to meet extra demand. He noticed that the company has consistently paid dividends well above its policy of at least 50%, ranging from 74% to 108% of its net profit over the last 15 years. The stock holds a forward dividend yield of 5.7%.

Leong also highlighted Seng Fong Holdings Bhd (KL:SENFONG), whose forward yield stands at 6%, and has achieved strong financial performance in recent quarters, enabling it to be more generous in its dividend payout.

Seng Fong is a natural rubber processor and exporter. In the last financial year, its payout ratio stood at 55%. Looking ahead, Leong expects Sen Fong’s earnings to remain steadfast as the group aims to ramp up production to meet rising demand, while earnings could be helped by capital allowance incentive via the adoption of industry 4.0.

KUB Malaysia Bhd (KL:KUB), Lysaght Galvanized Steel Bhd (KL:LYSAGHT), Poh Huat Resources Bhd (KL:POHUAT), Jasa Kita Bhd (KL:JASKITA) and Dancomech Holdings Bhd (KL:DANCO) are among high-yield small-cap companies, with net cash exceeding 50% of their market cap (below RM500 million).

Notably, cash-rich Scicom (MSC) Bhd’s (KL:SCICOM) dividend yield is high — at 7.7% — after its share price dropped 22.5% over the past 12 months. However, Low said the company is facing challenges with the emergence of automated chatbots.

As for small-cap companies with a market cap of below RM500 million, Malacca Securities’ Low cautioned investors to be wary of low stock liquidity issues and a company’s growth prospects to avoid value traps, despite their high dividend yield.

Meanwhile, other small-cap stocks with yield of 5% or higher include Sapura Industrial Bhd (KL:SAPIND), Tower REIT Bhd (KL:TWRREIT), Teo Guan Lee Corp Bhd (KL:TGL), Selangor Dredging Bhd (KL:SDRED), Fima Corp Bhd (KL:FIMACOR), CI Holdings Bhd (KL:CIHLDG), SLP Resources Bhd (KL:SLP), Tien Wah Press Holdings Bhd (KL:TIENWAH), LBI Capital Bhd (KL:LBICAP) and BP Plastics Holding Bhd (KL:BPPLAS).