by Ian Cooper

Things are looking good for small cap stocks.

All thanks to interest rate cuts, and the potential for more this year.

In fact, history shows that rate cuts often give small caps a boost. Part of the reason for that is these companies often rely on debt, and will therefore benefit from lower borrowing costs.  Plus, they’ll have easier access to capital, boosting potential profitability. Some argue that small caps are some of the strongest beneficiaries of rate cuts.

Seeing that we may get another two cuts this year, investors may want to jump into hot small cap stocks, or even jump into exchange traded funds (ETFs) such as:

Vanguard Small-Cap ETF (VB)

With an expense ratio of 0.05%, the Vanguard Small-Cap ETF tracks the performance of the CRSP US Small Cap Index. It also holds 1,336 stocks, some of which include SoFi Technologies, NRG Energy, Atmos Energy, Reddit Inc., and Pure Storage.

Even better, it pays a quarterly dividend. It just paid a dividend of just over 80 cents per share on October 1. Before that, it paid just over 78 cents a share on July 2. And before that, it paid out a dividend of just over 91 cents on March 31.

iShares Russell 2000 ETF (IWM)

With an expense ratio of 0.19%, the iShares Russell 2000 ETF tracks small cap US companies. It holds 1,965 stocks, including Credo Technology, Bloom Energy, IONQ Inc., Fabrinet, and Rambus Inc. And it pays a quarterly dividend.

Most recently, it paid a dividend of just over 67 cents on September 19. Before that, it paid out a dividend of just over 57 cents on June 20. And before that, it paid out a dividend of just over 45 cents on March 21.

Schwab US Small Cap ETF (SCHA)

With an expense ratio of 0.04%, the Schwab US Small Cap ETF tracks the total return of the Dow Jones US Small Cap Total Stock Market Index. It holds 1,687 stocks, including Reddit, Credo Technology, Affirm Holdings, Bloom Energy, and IONQ Inc.

It also pays a quarterly dividend. It just paid a dividend of just over eight cents a share on September 29. Before that, it paid out a dividend of just over eight cents on June 30. And before that, it paid a dividend of just over five cents a share on March 31.