5 Microcap Stocks which have Consistently Declared Dividends

A microcap stock is a publicly traded company that has a market capitalisation which is lower than small, mid, and large-cap stocks.

Investing in microcap stocks can be a daunting task for beginners because of their lack of popularity and the low liquidity.

However, they offer a huge opportunity for investors with some patience and risk tolerance.

Many microcaps are still in the early stages of development, which means that there is plenty of room to grow.

In today's article, we take a look at five microcap stocks which have consistently paid dividends and have sound fundamentals.

#1 Triton Valves

First on our list we have Triton Valves, an auto ancillary company with a marketcap of Rs 1.9 bn.

Incorporated in 1976, Triton Valves manufactures valves and cores that are used in automobile tyre tubes. The company supplies to almost all major tyre manufacturers in India and has maintained its leadership position for the past decade or so.

Despite being a market leader with a 75% market share, the company's revenues and profits have offered little excitement to investors.

In financial year 2022, the company reported its highest ever revenues which were offset by high expenditure cost.

Financial Snapshot

Rs m, standalone	FY18	FY19	FY20	FY21	FY22
Revenues	2,208	2,425	2,137	2,331	2,948
Growth (%)	18%	10%	-12%	9%	26%
Operating Profit	243	202	229	249	189
OPM (%)	11%	8%	11%	11%	6%
Net Profit	65	35	53	92	21
NPM (%)	3%	1%	2%	4%	1%
Debt to Equity (x)	0.78	0.76	0.56	0.71	0.82

Data Source: Ace Equity

The company has taken on some debt in financial year 2022 for capex of about Rs 150 m.

Coming to dividends...

Triton Valves has a long-established track record of paying consistent and increasing dividends over the years.

For 2022 although, the company declared a lower payout compared to earlier years. It paid Rs 5 per share as dividends in 2022.

Dividend Payout History of Triton Valves

Year End	Dividend (%)	Dividend per share (Rs)	Dividend yield (%)
31-Mar-2022	50.0	5.0	1.1
31-Mar-2021	200.0	20.0	2.1
31-Mar-2020	150.0	15.0	3.6
31-Mar-2019	120.0	12.0	1.2
31-Mar-2018	150.0	15.0	0.9
31-Mar-2017	150.0	15.0	1.2
31-Mar-2016	120.0	12.0	1.4
31-Mar-2015	120.0	12.0	1.4
31-Mar-2014	80.0	8.0	2.6
31-Mar-2013	70.0	7.0	2.3
31-Mar-2012	70.0	7.0	1.5
31-Mar-2011	100.0	10.0	1.6
31-Mar-2010	200.0	20.0	1.4

Data Source: Ace Equity

In 2022, shares of the company have gained 25%. At present, the company trades near its 52-week high levels.

To know more, check out the financial factsheet of Triton Valves and its latest quarterly results.

#2 INEOS Styrolution

Next on our list we have INEOS Styrolution, a specialty chemical company with a marketcap of Rs 15.2 bn.

The company is engaged in the business of producing styrenics plastic with focus on styrene monomer, polystyrene, ABS standard and styrenics specialties.

It manufactures various grades of ABS under the brand name 'Absolac' and SAN under the brand name 'Absolan' and is the market leader in both these product segments in India.

The company was not affected much by the pandemic and taking things to the next level, it improved profitability in 2022. This was primarily due to sharp rise in prices of ABS, SAN and polystyrene.

Financial Snapshot

Rs m, standalone	FY18	FY19	FY20	FY21	FY22
Revenues	18,953	20,905	15,790	16,315	21,790
Growth (%)	28%	10%	-24%	3%	34%
Operating Profit	1,422	211	719	4,267	4,884
OPM (%)	8%	1%	5%	26%	22%
Net Profit	662	(125)	(95)	2,802	3,225
NPM (%)	3%	-1%	-1%	17%	15%
Debt to Equity (x)	0.16	0.43	0.28	0.06	0.01

Data Source: Ace Equity

Coming to dividends, the company paid out highest ever dividend of Rs 297 per share in 2022. Never before has the company made such a high dividend payout in its history.

The one-time special interim dividend helped the company achieve a dividend yield of 30.5%!

Dividend payout history of INEOS

Year End	Dividend (%)	Dividend per share (Rs)	Dividend yield (%)
31-Mar-2023	1,050.0	105.0	11.9
31-Mar-2022	2,970.0	297.0	30.5
31-Mar-2021	100.0	10.0	1.1
31-Mar-2019	20.0	2.0	0.4
31-Mar-2018	40.0	4.0	0.5
31-Mar-2017	40.0	4.0	0.6
31-Mar-2016	40.0	4.0	0.7
31-Mar-2015	40.0	4.0	0.6
31-Dec-2013	40.0	4.0	1.0
31-Dec-2012	40.0	4.0	0.5
31-Dec-2011	40.0	4.0	0.7
31-Dec-2010	40.0	4.0	1.1

Data Source: Ace Equity

The company went one step further and has declared an interim dividend of Rs 105 per share for the ongoing year. At the current price, it results in a yield of 11.9%!

Interestingly, there have been several changes of hands in the ownership of the company amongst various international chemical groups.

For instance, this year in August, the company announced that Shiva Performance Materials (SPMPL) has entered into a share purchase agreement with ISAPL (holding company of INEOS).

Owing to promoter stake sale and volatility in global crude market, shares of the company have remained under pressure.

The raw materials which company uses for its primary products are derivatives of crude oil.

#3 Disa India

Next on our list we have Disa India, an industrial machinery company with a marketcap of Rs 11.6 bn.

The company is a leading equipment manufacturer with advanced foundry and surface preparation process technology.

It supplies complete foundry systems, with molding machines, sand mixers with combination of sand plant equipment, surface preparation machines and environmental control systems.

The Indian foundry industry is the second largest in the world and Disa India has a 70% market share in the segment.

This year, the company reached its pre-covid levels and reported a significant growth in profitability.

Financial Snapshot

Rs m, standalone	FY18	FY19	FY20	FY21	FY22
Revenues	2,049	2,517	2,333	1,851	2,561
Growth (%)	24%	23%	-7%	-21%	38%
Operating Profit	282	433	441	368	563
OPM (%)	14%	17%	19%	20%	22%
Net Profit	167	286	296	242	386
NPM (%)	8%	11%	13%	13%	15%
Debt to Equity (x)	0	0	0	0	0

Data Source: Ace Equity

Coming to dividends, Disa India paid out its highest ever dividend in 2022.

It paid out a dividend of Rs 160 per share and has a history of paying dividends since 1997.

Dividend Payout History of Disa India

Year End	Dividend (%)	Dividend per share (Rs)	Dividend yield (%)
31-Mar-2022	1,600.0	160.0	2.6
31-Mar-2021	100.0	10.0	0.2
31-Mar-2020	25.0	2.5	0.1
31-Mar-2019	25.0	2.5	0.0
31-Mar-2018	25.0	2.5	0.0
31-Mar-2017	25.0	2.5	0.1
31-Mar-2016	25.0	2.5	0.1
31-Mar-2015	25.0	2.5	0.1
31-Dec-2013	25.0	2.5	0.1
31-Dec-2012	25.0	2.5	0.1
31-Dec-2011	2,000.0	200.0	13.7

Data Source: Ace Equity

Interestingly, the company has high promoter holding and low equity. As of June 2022, the company has a total of 1.5 m shares outstanding. Out of this, 74.82% of shares are owned by the promoters!

In 2022, shares of the company have gained 38%.

#4 Tide Water Oil

Fourth on the list we have Tide Water Oil, a leading manufacturer and marketer of lubricants with a marketcap of Rs 18.4 bn.

The company's presence is spread across more than 65 countries. In India, it has been catering to both automotive and industrial segments since 1928 under the brand "Veedol''.

Its repertoire of automotive products includes engine oils for trucks, tractors, commercial vehicles, passenger cars, and two/three wheelers.

Apart from lubricants, the company is also engaged in the manufacture and sale of specialty vehicle sanitization products.

In financial year 2022, the company reported its highest ever revenues while profits were a tad lower than the previous year.

Financial Snapshot

Rs m, standalone	FY18	FY19	FY20	FY21	FY22
Revenues	12,747	13,795	13,166	12,585	15,357
Growth (%)	13%	8%	-5%	-4%	22%
Operating Profit	1,620	1,516	1,606	1,864	1,669
OPM (%)	13%	11%	12%	15%	11%
Net Profit	1,068	970	1,221	1,413	1,229
NPM (%)	8%	7%	9%	11%	8%
Debt to Equity (x)	0.06	0.06	0.05	0.02	0.02

Data Source: Ace Equity

Coming to dividends, Tide Water paid out Rs 55 per share as dividend in 2022. This was lower compared to earlier years, but still higher than other microcap stocks.

For the ongoing year, the company has already declared an interim dividend of Rs 5 per share.

Dividend Payout History of Tide Water

Year End	Dividend (%)	Dividend per share (Rs)	Dividend yield (%)
31-Mar-2022	2,750.0	55.0	5.0
31-Mar-2021	6,000.0	300.0	6.9
31-Mar-2020	5,000.0	250.0	7.8
31-Mar-2019	4,700.0	235.0	4.6
31-Mar-2018	3,500.0	175.0	2.9
31-Mar-2017	3,000.0	150.0	2.5
31-Mar-2016	2,500.0	125.0	1.9
31-Mar-2015	3,500.0	350.0	2.6
31-Mar-2014	2,000.0	200.0	2.5
31-Mar-2013	1,500.0	150.0	2.1
31-Mar-2012	1,200.0	120.0	1.6
31-Mar-2011	600.0	60.0	0.9

Data Source: Ace Equity

Shares of the company are beaten down in 2022. The stock currently trades near its 52-week low of Rs 975.

To know more, check out Tide Water's financial factsheet and its latest quarterly results.

#5 Vinyl Chemicals

Last on our list we have Vinyl Chemicals, a company engaged in the business of trading chemicals with a marketcap of Rs 11.9 bn.

The company mainly focuses on trading Vinyl Acetate Monomer (VAM), which is imported from various global suppliers and distributed in India.

It also deals with other specialty chemicals and supplies monomers to textile, paint, and adhesive sectors.

Earlier, the company was promoted by Pidilite Industries but was demerged in 2007 for strategic reasons.

In financial year 2022, the company posted record numbers as revenues more than doubled which led to increase in profitability.

Financial Snapshot

Rs m, standalone	FY18	FY19	FY20	FY21	FY22
Revenues	3,752	4,828	3,723	4,042	8,651
Growth (%)	28%	29%	-23%	9%	114%
Operating Profit	182	141	100	153	469
OPM (%)	5%	3%	3%	4%	5%
Net Profit	117	89	75	114	349
NPM (%)	3%	2%	2%	3%	4%
Debt to Equity (x)	0.01	0.01	0.01	0.01	0.01

Data Source: Ace Equity

For financial year 2022, the company paid out a dividend of Rs 10 per share, highest in its history.

Over the years, Vinyl Chemicals has consistently grown its dividend as is evident from the table below.

Dividend Payout History of Vinyl Chemicals

Year End	Dividend (%)	Dividend per share (Rs)	Dividend yield (%)
31-Mar-22	1,000.0	10.0	3.8
31-Mar-21	375.0	3.8	3.2
31-Mar-20	240.0	2.4	5.7
31-Mar-19	240.0	2.4	3.0
31-Mar-18	240.0	2.4	2.4
31-Mar-17	180.0	1.8	2.6
31-Mar-16	150.0	1.5	3.0
31-Mar-15	150.0	1.5	2.3
31-Mar-14	100.0	1.0	6.0
31-Mar-13	80.0	0.8	8.6
31-Mar-12	60.0	0.6	6.0
31-Mar-11	50.0	0.5	5.6

Data Source: Ace Equity

In initial months of 2022, chemical stocks were in downtrend as prospects were looking weak. However, the entire scenario changed mid-year and chemical stocks started to rise.

The reasons were not that hard to guess...

Depreciating rupee and a surge in demand due to China plus one strategy helped chemical companies deliver quick returns.

Vinyl Chemicals was no exception and rose substantially in quick time.

Also adding to sentiment was client demand shifting from Europe to India as companies in Europe temporarily closed operations due to energy shortage.

To know more about the company, check out its financial factsheet.

Why microcap stocks present huge growth potential

It's a known fact that legendary investor Warren Buffett is all about investing in the biggest companies with the most well-known brands.

The Cokes, the American Expresses, the Walmarts, the Gillettes, and the IBMs for instance.

But do you know that's not how Buffett became Buffett?

When he was looking to make the really big returns in the early part of his career, that's not the kind of business he was looking for at all.

He was busy digging out tiny, hidden and unknown companies that were way off the map and completely out of the radar of most investors, i.e., microcap stocks.

Eicher Motors, Avanti Feeds, Astral Polytechnik and the likes were tiny microcaps two decades ago. Skip forward to present, they are the market darlings today.

It's very typical for a good microcap stock to turn a multibagger in a matter of months.

However, since they have a small marketcap, they are extremely volatile and hence require investors to have a higher tolerance for risk.

Since microcap stocks interest you, check out the below video where Richa Agarwal reveals her top microcap stocks in this market.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...