2 Dividend Up-and-Comers You Don't Want to Miss

To stretch the music metaphor just a little bit further, if the first five stocks were reliable rock stars and the next two were high-yield divas, the next two we're going to take a look at are the yet-to-be-discovered stars of tomorrow.

Though it can be tough to find solid dividends among the small-cap ranks -- many small companies prefer to reinvest all of their cash in growth -- it's a big mistake to skip over this part of the market. And because smaller companies tend to get less exposure than larger ones, many investors miss these companies and allow the more intrepid investors to scoop them up at bargain prices.

Better than Goldman

At this point it may be nearly impossible for some people to think about Goldman Sachs [NYSE: GS] and other investment banks without thinking about their part in the financial crisis. It'd be understandable if some investors get the urge to shake a fist every time they hear Goldman's name. But let's not be too quick to lump every investment bank in the same category as the too-big-to-fail screw-ups.

Greenhill & Co. [NYSE: GHL] is an investment bank. It's a high quality investment bank that lands the same caliber of people (or better) than the folks at Goldman, Morgan Stanley [NYSE: MS], or JPMorgan Chase [NYSE: JPM]. But you probably haven't heard of Greenhill.

Why? Because Greenhill does not fancy itself a financial master of the universe.

It does not have massive trading operations that threaten the ongoing existence of the company or the health of the U.S. financial system. Instead, Greenhill focuses primarily on advisory services. That is, it provides companies with advice on mergers and acquisitions, raising capital, and other special financial situations.

And while the name Greenhill may not ring bells for you, the projects it's worked on will no doubt be familiar. The deals that Greenhill is currently working on (or recently wrapped up) include Supervalu's [NYSE: SVU] multiple deals with Cerberus Capital; the U.S. Treasury's sale of its stake in AIG [NYSE: AIG]; Avalonbay [NYSE: AVB] and Equity Residential's [NYSE: EQR] $16 billion acquisition of Lehman Brothers' Archstone Enterprise; and the $5.9 billion sale of Target's [NYSE: TGT] REDcard credit card assets to Toronto-Dominion Bank [NYSE: TD]. 

The beauty of this business is that while Greenhill spends significant money on its people, the business itself doesn't require much capital. That means that when the company's business is raking it in, there is plenty of cash available to pay shareholders.

Not a minor player

While hospitals do sanitize and reuse some equipment, the high standard for sterility and cleanliness means that there are a great many items that get used once and pitched. These items include gloves, disposable scalpels, respiratory tubing, umbilical cord clamps, medicine cups, and bandages.

Meanwhile, with the cost of health care rising and everybody trying to cut costs wherever they can, hospitals and other health-care providers want to find the most effective and cost efficient way to stay stocked up and ready to serve their patients.

Enter Owens & Minor [NYSE: OMI]. Owens & Minor is a distributor of medical and surgical equipment, as well as a provider of outsourced logistics and inventory management services. The company works with 1,400 suppliers and has access to over 200,000 medical-surgical products, including products from its own private-label MediChoice line. In a business where getting it right is absolutely critical, it says a lot that the company has a 98% customer satisfaction rating across roughly 4,000 customers.

For investors, the proof of its success is in black and white in the numbers. Going back to 2008, the company had an average return on capital of 12%. Between 2000 and the twelve months ending in September 2012, it grew earnings per share 171%. And the dividend? Owens & Minor has raised its dividend every year since 1997 and has more than doubled its payout since 2006.

Almost there!

At this point, this musically-gifted dividend portfolio is up to five reliable rock stars, two high-yield divas, and now two promising small caps. But it'd be a mistake to stop here.

There are two more stocks to add to this group and they're the most exciting of all. Both of these companies have solid, long-term dividend track records and extremely well-run businesses backing those dividends. Better still, both of these stocks are already active recommendations in the market-beating Motley Fool Stock Advisor newsletter run by Motley Fool co-founders David and Tom Gardner.

To find out more about these final two stocks, click below.