You are using an outdated browser. Please upgrade your browser to improve your experience. Three small-company stocks with fat yields and three with fast-growing payouts.

By Kathy Kristof , Contributing Editor From Kiplinger's Personal Finance, April But some experts believe that income investors have overfished the big-company waters, pushing the prices of some high-yielding behemoths beyond the edge of fair value. Small companies, however, are often overlooked. They can be too tiny to lure the whale-sized institutions that dominate Wall Street. And that can spell opportunity for individual investors, who aren't buying shares in multimillion-dollar blocks.

Of course, no matter how high a stock's yield, investors still have to ask two overriding questions: What are the stock's prospects? And is the rich dividend sustainable? There's no better way to lose money than to buy a stock right before the payout is cut. Here are a half-dozen minnows that pay delectable dividends.

Testing 1, 2, 3. Working with makers of everything from windmills to snowmobiles, MTS Systems symbol MTSC helps its customers test prototypes of new products for reliability, stability and durability. The year-old Eden Prairie, Minn. Although the global economy is improving, growth is likely to remain restrained for some time.

When competition is fierce, businesses feel pressured to develop more new products. To get these products to market quickly, they rely on the testing expertise of companies such as MTS.

That can be a problem when insiders care mostly about enriching themselves at the expense of other shareholders, but in this case it's a plus, says Sidoti analyst David Gold.

This enviable balance sheet enabled Electro Rent to acquire its third-largest rival during the —09 recession, and it puts the Van Nuys, Cal. Although Gold doesn't expect profits to rise in the current fiscal year, which ends in May, he projects that both sales and earnings will grow by double-digit percentages in and beyond.

First PacTrust Bancorp BANC has transformed itself over the past five years, says D. The parent of Pacific Trust Bank started as a credit union, then converted to a savings and loan, and now has turned itself into a commercial bank. That kept the company's profit margins slim. Now the Irvine, Cal. First PacTrust is also on an acquisition spree that could double its size in the next two years, says Tenner.

It's not a sexy business, but it has proved resilient even in tough economic times, says Kevin Steinke, of Barrington Research.

And now that the economy is picking up a little steam, there's a good chance that the Minnetonka, Minn. But if history is any guide, the payouts will keep rising. Steinke thinks the stock will appreciate in line with the company's improved prospects.

Wiley reported weak earnings for the May—October period the first half of its current fiscal year and announced that sales would be down for the full year. But that's due to a restructuring plan that involves the sale of lagging consumer publications and the expansion of Wiley's efforts in online learning and technical books and journals, where the prospects are brighter.

At that price, it yields 2. This is a risky business, however, and TICC, not surprisingly, is the riskiest stock on our list.

Top 10 Penny Stocks that Pay Dividends List

For starters, because the companies TICC invests in are young and small, they stand a much greater chance of failing than, say, IBM. Moreover, because TICC invests with borrowed money, it is at the mercy of the credit markets, which, as we saw only a few years ago, can freeze up during a financial crisis.

The company has been hiking dividends steadily since the recession ended, from 15 cents per quarter in early to a current rate of 29 cents. With the economy expanding slowly, the risks of another credit crisis and a rise in defaults are declining. John Hecht, an analyst with Stephens Inc. Toggle navigation Menu Subscribers Log In.

Top 12 Reliable Stocks That Pay Monthly Dividends

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