Ben Richards from Seneca Financial Solutions, gives us the good, the bad and the ugly in small-caps dividends.
He says that Deterra Royalties (DRR), with a 6% fully franked yield, is one example. However, Richards cautions investors to consider the drivers of dividends. He notes that falling earnings and negative operating leverage, particularly among baby retail companies, can put dividends at risk.
Richards also says that investors should be cautious when investing in smaller exploration companies involved in lithium exploration in Canada, as they are jumping on the lithium hype and the weather in the area where exploration is typically done is generally not favourable.
Watch the interview: Ausbiz – Small cap dividends – the good, the bad and the ugly