The importance of dividend yields from shares as a source of income for investors – particularly self-managed super funds (SMSFs) – is not going to lessen anytime soon. But with 45% of Australia’s dividends in 2014 flowing from the big four banks and BHP, according to fund manager Capital Group, income-oriented investors are coming under pressure to diversify their sources.

Here are five smaller stocks that look promising on the dividend front – with the obvious caveat that prospective dividends cannot be considered guaranteed. But that is the same with CBA.

Programmed Group (PRG, $2.66)

Workforce and facilities management provider Programmed Group is one of the group of stocks that has done it tough in recent times because it is perceived as over-exposed to the resource sector, but Programmed is more diversified across the economy than many people would think. It points out that over the last six months it has secured major new long-term work in education, social housing, defence, tourism, food and agriculture – and that all of these industries are forecast to grow over the next five to ten years.

Source: Yahoo!7 Finance, 13 April 2015

PRG adds that its property and infrastructure opportunities are “expanding,” and revenue growth from this sector will offset any potential falls in resources revenue over the next 12 months. In particular, its facilities management work on hand is at a record level, of $1.5 billion.

In December PRG made a $700 million “merger of equals” offer for rival workforce provider Skilled Group, worth $1.38 a share at the time, to create a bigger business to improve economies of scale. Skilled has dismissed the offer, and there has been little discussion since, although the market expects an improved offer from PRG.

In FY14, PRG paid a fully franked dividend of 17.5 cents, which at the current price of $2.66, prices the stock on an historical yield of 6.6%. The company has a strong balance sheet, with debt/equity ratio of just 6%, and the analysts’ consensus forecasts collated by FN Arena see the FY15 payout lifted to 18.4 cents, followed by 19.1 cents in FY16. That would price PRG at a prospective FY15 yield of 6.9%, and 7.2% in FY16.

Villa World (VLW, $2.33)

Almost derailed by the post GFC property downturn, residential property developer Villa World has rebuilt itself to a strong position, helped by low interest rates and first-home-buyer grants. Villa World ended the 2014 financial year in the black after posting a net profit of $19.1 million for the year, a healthy turnaround on the $13.5 million loss in FY13.

Then, for the half-year to December 2014, VLW reported a first-half profit of $13 million, up 71% on the $7.6 million it made in the December 2013 half. The company was sufficiently heartened to upgrade its full-year pre-tax profit guidance from about $24 million to at least $28.5 million.

Source: Yahoo!7 Finance, 13 April 2015

The company continues to grow its development portfolio, with $103.6 million in land acquisitions in the first half expected to yield more than 2400 lots. Queensland remains the dominant contributor to sales (63%), Victoria (24%) and NSW (13%), with the company’s major focus at present on increasing its Victorian land bank.

In FY14, Villa World paid a fully franked dividend of 15 cents a share, which places it on a historical yield of 6.4%. The analysts’ consensus forecasts see Villa World maintaining the 15-cent payout in FY15, before boosting it to 16 cents in FY16. Given these dividends, the FY15 prospective yield is 6.3%, improving to 6.8% for FY16.

Dick Smith Holdings (DSH, $2.05)

Floated in December 2013, electronics retailer Dick Smith has not exactly set the world on fire on the stock market, spending very little time trading above its $2.20 issue price, and currently changing hands at $2.05. Retail is a tough business at present, and while the company’s Australian stores are performing well, New Zealand is dragging the chain. Dick Smith is working hard on the things it can control – it has restructured its support office and supply chain, and analysts see further productivity improvements to come.

Source: Yahoo!7 Finance, 13 April 2015

Dick Smith has a strong underlying earnings base, and strong leverage to any retail resurgence: while Australian consumer confidence is fickle, factors such as low interest rates, cheaper fuel and a surging share market are underpinning retailers’ optimism.

Dick Smith has not yet paid a full-year dividend, but analysts’ consensus forecasts expect 12 cents a share to be paid in FY15, followed by 13.8 cents in FY16. At $2.05, that prices DSH on a fully franked yield of 5.9% in FY15 and 6.7% in FY16.

Legend Corporation (LGD, $0.23)

Listed in 2004, the Adelaide-based Legend provides engineering solutions to the electrical, information technology, semiconductor, medical and power utility industries. It operates through two core business units; electrical, power and infrastructure; and innovative electrical solutions.

Source: Yahoo!7 Finance, 13 April 2015

Although the group has operations in Australia, New Zealand, China and the United States, Legend’s major markets are geared to commercial and residential construction activity in Australia. One of Legend’s core brands, Cabac, designs, makes and distributes products to the electrical industry and is a likely beneficiary of the recent upturn in housing construction in key markets.

Legend is typically a strong generator of excess cash from its operations, and has a track record of healthy dividend payments. In FY14 it paid a fully franked dividend of 1.8 cents a share: at the current share price of 23 cents, that equates to an historical yield of 7.8%. Analysts see Legend retaining that dividend in the current financial year, so the prospective FY15 yield is the same, but the company is forecast to lift its full-year dividend to 1.9 cents a share in FY16, which would place it on a prospective fully franked yield of 8.3%.

Data#3 (DTL $0.795)

Like most software service companies, Data3 has been battered lately by lower spending on technology projects from governments and corporates in a sluggish economy. The stock disappointed the market severely in FY14, with full-year net profit slumping by 38% to $7.5 million, despite lifting revenue by 8% to $833.6 million. Nor did what passed for forward guidance give much comfort either, with DTL saying it expected to ‘improve on the 2014 result’.

Source: Yahoo!7 Finance, 13 April 2015

Profit growth for the December 2014 half-year was a lot better, with net profit up 39% to $3.6 million (this time it was revenue that disappointed, up just 1.8% to $406.4 million), but was most interesting to many investors was the two-fifths lift in the interim fully franked dividend, to 2.1 cents a share, from 1.5 cents in the December 2013 half.

Data#3 has big opportunities in the “big data,” outsourcing and cloud computing markets, although these are highly competitive. After earnings hiccups in FY13 and FY14, analysts see the company as poised for earnings – and dividend – growth in FY15 and FY16. The boosted interim dividend has analysts expecting a full-year payout of 5.1 cents a share in FY15, rising to 5.2 cents a share in FY16.

At the share price of 79.5 cents, DTL is priced on an historical FY14 yield of 5.7%, a prospective fully franked FY15 yield of 6.4%, and 6.5% for FY16.

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