In this article I write about three stocks that pay in effect an annual special dividend. A special dividend can substantially increase the dividend yield. But in most cases the special dividend is irregular and may occur once every few years. For example, Costco Corporation (COST) is well-known for paying a special dividend every few years. But Costco often trades at a premium to the broader market and currently, Costco is trading at a premium to historical valuation multiples. I have also written about MSC Industrial Direct Co. (MSM) that also pays a periodic special dividend.
However, in my research I have come across several stocks that essentially pay an annual special dividend with extra cash on hand on top of the quarterly regular dividend. This increases the yield of these stocks dramatically. Below I discuss three stocks in three different industries that have been paying an annual special dividend for the past several years. These stocks may be suitable for small investors seeking income.