Most dividend investors tend to gravitate toward the usual suspects. They focus on the bluest of bluechips that show up on every “safe income” list. And there’s nothing wrong with that.
Bluechips and largecap stocks have built that reputation over many years by consistently making regular payouts. But if you’ve been in this game long enough, you know that some of the most rewarding positions in a portfolio are the ones nobody talks about.
That’s where smallcaps come in. Smallcap stocks are companies ranked beyond the top 250 names that are yet to make a name for themselves.
They excite investors due to their niche offerings, but they can also scare investors by their wild swings in a volatile market.
So naturally, astute investors focus on smallcap companies that also have a history of paying dividends. And then there are some smallcap companies that are not just paying dividends but consistently raising them.
With 2026 shaping up to be an interesting year for rate-sensitive assets and domestic-focused businesses, it makes sense to keep track of some small-cap names that have been growing their dividend payouts.
Let’s look at 5 such companies. These stocks are filtered using Equitymaster’s stock screener: Best Smallcap Dividend Growth Stocks in India.
#1 Cello World
First on the list is Cello World.
Cello World is a leading consumer houseware brand with a diverse portfolio across plastic, glassware, and writing instruments.
The company’s writing segment, re-entered in 2019 under Unomax, now contributes 17% of revenue with industry-best margins.
The products offered by Cello are sold under its own brand name. The popular sub-brands under the Cello brand include Kleeno, Puro, Chef, H2O, Modustack, Maxfresh, and Duro.
The company also trades in products such as steel and glassware products, by sourcing these products from contract manufacturers primarily located in China and subsequently selling them to consumers.
In FY25, the company invested Rs 2.5 billion (bn) at its manufacturing facility in Falna, Rajasthan, for its glassware business. This facility, operationalized in phases, has an annual production capacity of 20,000 tonnes.
This investment marked the company’s entry into in-house glassware production, making it the only domestic consumer products company in India with this capability.
Coming to its dividend payout history, it has paid dividends consistently for many years now. Over 3 years, its dividend per share have grown at a compounded growth rate (CAGR) of over 800%.
This has been possible owing to healthy financials over the years. Its sales and net profit have grown at a CAGR of 16% and 18% respectively over 3 years.
During the same time, its ROE and ROCE have averaged 44% and 59%.
The company has recently announced a structural reorganisation involving a demerger and subsequent merger.
Wim Plast’s manufacturing division (molded furniture and air coolers) will be transferred to Cello Consumer Products while the remaining business will merge into Cello World to simplify the structure and regulatory compliance.
The company’s expansion into new product categories requires a stable inflationary environment to ensure that capital expenditure translates into meaningful return on capital employed.
Cello – 1 Year Share Price
Data Source: BSE
#2 IndiaMART Intermesh
Second on the list is IndiaMART Intermesh.
The company is India’s largest online marketplace designed to connect businesses with other businesses. Think of it as a vast digital platform where buyers can discover products and services, and suppliers can showcase their offerings and find potential customers.
Their business model is largely based on subscriptions, giving suppliers access to a suite of digital tools like web storefronts, lead management systems, and smart, AI-driven matchmaking that helps them connect with high-intent buyers.
IndiaMART aims to make doing business easy, particularly for the millions of MSMEs across India, by bringing them online and streamlining their operations.
It serves a huge network, boasting over 211 million (m) registered buyers and 8.4 m registered suppliers, listing 119 m products across nearly a 100,000 categories and 56 industries.
Beyond the core marketplace, it also strategically invests in various business enablement solutions like accounting software, logistics, and HR tech to create a comprehensive ecosystem for MSMEs.
Coming to its dividends, the company has increased its dividend per share at a CAGR of 164% over the past 3 years.
It has consistently increased its dividend payout over the past 5 years. This has all been possible due to its stable financials.
Over the past 5 years, the company’s sales and net profit have grown at a CAGR of 17% and 30% respectively.
The ROE and ROCE have averaged 19% and 25% during the same period.
Going forward, it aims to achieve around double digit YoY growth for collections and revenue. The long-term goal is a healthy mix of ARPU growth and customer growth which could sustain multi-decade expansion, much like the company’s past 30 years.
This anticipated normalisation accounts for increased investments in customer acquisition as they return to a growth mode.
IndiaMART Intermesh – 1 Year Share Price
Data Source: BSE
#3 KPR Mill
Third on the list is KPR Mill.
KPR Mill stands as a prominent, vertically integrated apparel manufacturing company in India, recognised for its advanced operations.
The company has 15 cutting-edge manufacturing facilities and caters to renowned international brands through its exports. It produces a wide range of products such as yarn, fabric, garments, sugar, molasses & ethanol.
The company also has a presence in the automobile industry & power generation industry through its subsidiaries.
Over the years, the company has increased its dividend payouts. The average dividend per share has grown at a CAGR of 140% over past 3 years.
Coming to its financials, its sales and net profit have grown at a CAGR of 14% and 17% respectively over the past 5 years.
The average ROE and ROCE during the same period have been 21% and 27%.
Going forward, the company stands to benefit from the recent deal with EU as its export business takes off. The FTA eliminates tariffs, allowing KPR Mill to compete on equal terms with Bangladesh.
The zero tariff on exports to EU, will help the company capture a larger portion as pure margin or use it to aggressively gain market share.
The company’s management has guided for double-digit growth, driven by increased garment capacity and improving export volumes.
A capex of around Rs 6 bn has been earmarked which will be funded through internal accruals. This is expected to further strengthen KPR’s integrated model and improve operating leverage.
KPR Mill – 1 Year Share Price
Data Source: BSE
#4 Timken India
Last on the list is Timken India.
Timken India, a subsidiary of The Timken Company, specialises in anti-friction bearings and mechanical power transmission products.
Established in 1987 as Tata Timken, it became Timken India in 1999. It has manufacturing plants in Jamshedpur and Bharuch, along with a technology center in Bangalore.
The company has recently ramped up its manufacturing with new facilities in Bharuch and Jamshedpur, producing high-performance bearings for railways, automotive, and heavy machinery.
Coming to its dividends, the average dividend per share has grown at a CAGR of 120% over the past 3 years. It has immensely increased its dividend payout in the recent 3 years.
This has been possible due to growing financials, and strong export growth which have played a role in its growth.
Over the past 5 years, its sales and net profit have grown at a CAGR of 14% and 13% respectively.
The ROE and ROCE have averaged 16% and 22% during the same period.
The company’s focus on advanced bearing technology and power transmission keeps it ahead of the curve. Backed by lean operations, cost controls, and value-added services, Timken is preparing for sustained, high growth going forward.
The company is pursuing opportunities in sectors such as electrification in railways and the EV industry. Timken is optimistic about the potential in these areas and is expanding its portfolio to cater to the evolving market needs.
The management plans to innovate, focusing on high-tech, precision motion control systems and advanced bearing technologies.
Timken India – 1 Year Share Price
Data Source: BSE
Conclusion
Smallcaps can be unforgiving – liquidity is thinner in this space, coverage is sparse, and one disappointing earnings call can wipe out months of gains.
But that’s also kind of the point. Investors who put in the work to find quality dividend growers before they get discovered tend to be the ones sitting on meaningful positions by the time everyone else catches on.
The four names we discussed above are businesses with real cash flows, real earnings, and a demonstrated commitment to returning capital to shareholders. That combination doesn’t guarantee anything, but it’s a decent foundation to build on.
As always, do your own research before putting any money to work. Check the latest filings, understand the business model, and make sure the thesis still holds. Things can change fast, especially at the smaller end of the market.
Also, make sure to check for corporate governance and their valuations before making any investment decisions.
Happy investing.
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