I'm always on the lookout for the next home run stock.

At the end of each year, I like looking back to see what I can learn from the best and worst performing stocks over the long term. I make sure to key in on dividend stocks as they have a history of outperforming the market.

By examining the top performers of the past 11 years, I want to key in on traits that top performers of the 2010s should have. In my search, the only restriction I set was that the market cap needed to be higher than $500 million, and the companies had to pay dividends every year. Look at this year's list:

 

Company

11-Year Return

Current Yield

1

BP Prudhoe Bay Royalty Trust (NYSE: BPT)

6,012.7%

7.8%

2

Southern Copper (NYSE: SCCO)

3,336%

1.0%

3

Holly (NYSE: HOC)

2,958.4%

1.4%

4

World Fuel Services (NYSE: INT)

2,084.8%

0.4%

5

Precision Castparts (NYSE: PCP)

2,081.6%

0.1%

6

Lufkin Industries (Nasdaq: LUFK)

2,010.3%

0.8%

7

Potash Corp. of Saskatchewan

1,943.9%

0.2%

8

Occidental Petroleum

1,097%

1.9%

9

Permian Basin Royalty Trust

1,082.2%

6.6%

10

Cummins

1,056.8%

1.0%

11

EOG Resources

996.5%

0.6%

12

Seaboard

983.2%

0.1%

13

Ametek

902.2%

0.4%

14

SM Energy

892%

0.4%

15

Tanger Factory Outlet Centers

886.3%

3.1%

Source: Capital IQ, a division of Standard and Poor's. Return from Dec. 31, 1999 to Dec. 31, 2010.

BP Prudhoe Bay Royalty Trust was the top dividend stock of the millennium so far with an 11-year return of 6,012.7%. So what do all these stocks have in common?

 

Company

Market Cap on 12/31/1999

1

BP Prudhoe Bay Royalty Trust

$194 million

2

Southern Copper

$1.23 billion

3

Holly

$110 million

4

World Fuel Services

$91 million

5

Precision Castparts

$643 million

6

Lufkin Industries

$96 million

7

Potash Corp. of Saskatchewan

$2.61 billion

8

Occidental Petroleum

$7.95 billion

9

Permian Basin Royalty Trust

$265 million

10

Cummins

$2 billion

11

EOG Resources

$2.09 billion

12

Seaboard

$289 million

13

Ametek

$613 million

14

SM Energy

$275 million

15

Tanger Factory Outlet Centers

$163 million

Source: Capital IQ.

They were all small-caps or mid-caps at the beginning of the millennium and were paying dividends.

Dividend champions
So why have these companies' stocks done so well? You'd figure Wall Street would have caught on, but analysts only have so much time, so many small-cap stocks are often overlooked. That creates a perfect opportunity for enterprising investors to capitalize on Wall Street's lack of vision by getting in on companies on the cheap before Wall Street has discovered them.

One small-cap stock for the rest of the millennium!
Sorry -- that's not happening. I highly doubt that any companies around today will be with us in 3000. The technological rate of change is too fast, and historically the odds aren't good. According to Wikipedia, only 11 companies that were around 1,000 years ago are still with us today (four of which are Japanese hotels). While we can't know for sure what the best dividend stock this millennium will be, I asked our team of investment analysts for their favorite small-cap dividend stock.

They recommended AmTrust Financial Services (Nasdaq: AFSI).

Company

Yield

Market Cap

P/E

CAPS Rating (out of 5)

AmTrust Financial Services

1.8%

$1.07 billion

8.0

*****

AmTrust Financial Services is a growing niche insurance company that generates consistently attractive profits and returns on equity. With shares priced around $17.75, they trade at a forward price-to-earnings ratio of just over 7, a dividend yield just under 2%, and a price-to-book value just over 1.5. For a profitable, growing company, this is a great opportunity for investors. Having navigated the financial sector's meltdown successfully, AmTrust is positioned to grow over the course of 2010 and beyond.

By focusing on the small-business sector and highly profitable insurance niches -- especially workers' comp and extended warranties -- AmTrust has carved itself a large footprint in specialized markets. The company's high renewal rates are an especially attractive feature, as they give a recurring revenue stream and indicate that AmTrust has a strong competitive position.

Beyond the attractive valuation, AmTrust is relatively small and obscure; only one Wall Street analyst provides revenue estimates for the company. As more investors become familiar with the company, the valuation will likely rise, and stockholders will reap the spoils.

Your next step
AmTrust is a strong dividend stock for your portfolio. If you're looking for more great dividend stocks to round out your portfolio, look at a new free report from Motley Fool's expert analysts called "
13 High-Yielding Stocks to Buy Today," which includes a stock named by a senior analyst as "the dividend play of a lifetime." Tens of thousands have requested access to this report, and today I invite you to download it at no cost. To get instant access to the names of these 13 high yielders, simply click here -- it's free.