One of the fundamental pillars of a successful investment strategy over the long haul is diversification. Seasoned professionals always preach about the importance of maintaining a well-balanced portfolio of securities, and for good reason too: spreading out your exposure across sectors, market caps, and even geographies is a surefire way to mitigate some of your risk while still having “skin in the game.”

It may seem a bit counterintuitive, but there is actually good reason to consider investing in companies that are not very diversified. That is to say, finding companies that derive the majority of their revenues from one kind of product or a particular service [see also Best Global Brands That Pay Dividends].

The appeal behind investing in these so-called “one trick ponies” is actually very straightforward; because these firms are focused on just one product, investors can more accurately pinpoint the underlying price drivers and thereby have a clearer sense of where the stock might be headed.

Think about this: it’s much harder to isolate, understand, and gauge the potential headwinds and catalysts for a company with a vast product lineup compared to a firm that predominantly focuses on a single line of business. Likewise, these single-product companies also bear more risk; the simplicity of their business models is also their greatest source of risk, seeing as how one negative development in their particular sector can have a devastating effect on the entire company.

Below we take a look under the hood of five dividend-paying, single-product companies: