According to Bank of America, investors looking for income should look to small-cap stocks with some high-quality dividend payers. At a time when the S&P 500 and Nasdaq Composite are hitting new records and posting annual gains of about 11%, the Russell 2000 pales in comparison. It’s only up 2.5% in 2024. But don’t be alarmed by the small-cap index’s underperformance. There are names in there that offer quality dividend yields, according to Jill Carey Hall, equity strategist at Bank of America, in a research note Monday. “For the first time in more than 16 years, a larger proportion of Russell 2000 stocks offer a dividend yield above the 10-year yield (10%) than S&P 500 stocks (7%),” she said. of the Russell 2000 stocks that currently pay dividends. Furthermore, once the Federal Reserve starts cutting interest rates, cash-based yields will decline, and that will make these dividend payers even more attractive for income. Bank of America screened the Russell 2000 for small-cap dividend payers that it rates as buys and that meet the following criteria: High quality: This means they are profitable companies and are in the bottom three groups according to 5-year income volatility. Dividends are expected to be stable or increase based on the bank’s dividend rating. Their valuations make them cheap: The stocks are in the bottom three quartiles based on forward price to earnings. Below are the names that have created class. Salty snack company Utz Brands is on the list. Bank of America upgraded the stock to buy from neutral in March. Analyst Peter Galbo wrote: “We are increasingly confident in UTZ’s roadmap to achieve a long-term sales algorithm of 4- 5% from 4Q24 and into 2025, which we believe can drive both earnings and multiples.” He noted that the company’s move to expand geographic distribution in the West, Midwest, Southwest and parts of the Southeast has helped Utz gain market share. The company is headquartered in Hanover, Pennsylvania. Utz shares are up nearly 12% in 2024, and the stock pays a dividend yield of 1.3%. Fast food chain Jack in the Box also made Bank of America’s list. Even though shares are down 34% in 2024, some Wall Street firms are highlighting the opportunity. Loop Capital analyst Alton Stump wrote in April: “We recommend investors take advantage of JACK’s recent sell-off even though an increase in asset value is expected soon. product”. He noted that the combination of slowing same-store sales and California’s fast-food minimum wage law were the culprits behind the stock’s underperformance. “However, in our view, these perceived headwinds are misguided,” Stump said. He rates the stock a buy. The stock pays a dividend of about 3.2%. Finally, Bank of America added Essential Properties Realty Trust to its list of buy-rated dividend payers. The real estate investment trust specializes in single-tenant properties and its portfolio includes car washes, early childhood education centers and quick-service restaurants. In March, Citi upgraded EPRT to buy from neutral, citing improved confidence in the company’s buyback process and leverage below target metrics, helping its balance sheet The company becomes flexible. “With low leverage and significant liquidity, we view forecasts as achievable and post growth of close to 6% by 2024,” a team of Citi analysts led by Nick Joseph wrote. outperforms most net lease REITs in our coverage.” The stock has a dividend yield of 4.2% and shares will grow 7.5% in 2024.