Large-cap dividend-paying stocks typically produce better-than-­average returns in volatile markets. But in 2022, the S&P 500 High Dividend Index was flat for the year versus the S&P 500’s 19% decline. For better bargains now, look to small- and mid-cap dividend payers below Wall Street’s radar. The valuations for these companies haven’t looked so attractive since the early 2000s, and many already have priced in a 2023 recession.

What to look for: Solid dividend coverage that improves sustainability and allows for growth…manageable debt under adverse conditions…strong cash flow…long-term advantages over competitors…shares selling at a discount relative to their peers and their own valuation histories. Four favorites now…

Chord Energy (CHRD) produces crude oil and natural gas in the Bakken Shale area in Montana and the Dakotas. It pays a quarterly base dividend and a variable dividend based on cash flow and leverage. Recent yield: 3.7% base, 10.9% including the most recent variable dividend annualized.

CareTrust REIT (CTRE) has 200 nursing and assisted-living facilities in 21 states. By 2030, there will be more than 16 million senior households that may need this care. Recent yield: 5.7%.

Black Hills (BKH) provides electricity and natural gas to more than 1.3 million customers. The utility company has raised its annual dividends 52 years in a row. Recent yield: 3.55%.

Columbia Banking System (COLB), a regional bank in Washington and surrounding states, has more than 150 branches. A pending merger could make it one of the largest community banks in the Northwest. Recent yield: 4.35%.

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