The ten highest dividend yields on Aim
Rupert Hargreaves picks the highest-paying dividend stocks on Aim, London’s junior market for small and medium-sized growth companies.
Aim (formerly the Alternative Investment Market) is London’s market for small and medium-sized growth companies. It has a bit of a bad reputation among investors and it’s easy to understand why. Aim has greater regulatory flexibility compared to the main market, which is supposed to make it easier for companies to list and attract investor capital.
Unfortunately, this light-touch regulatory regime has been abused by bad actors over the years. As a result, Aim has developed a reputation for being a financial Wild West.
But while it’s true that there have been some notable disasters in recent years, there have also been some great success stories. The manufacturer of concrete laying laser-guided equipment, Somero Enterprises, Inc. (LSE: SOM), is a great example. Investors who were savvy enough to put £100 in this company ten years ago have seen the value of their holdings hit £4,000 today.
According to AJ Bell, 2022 could be the second-best year ever for total FTSE 100 cash returns with total distributions hitting as much as £81.2bn. Aim will never be able to rival the blue-chip index for income (the aggregate market capitalisation of the index is only around £80bn), but that doesn’t mean investors should ignore what the index has to offer.
With that in mind, here are the highest yields in the Aim All-Share index (excluding oil & gas and mining companies and stocks with a market capitalisation of below £20m at the time of writing):
Dividend per share for 2022*
Dividend per share for 2023*
Dividend yield (%)
Dividend growth (%)*
Polar Capital Holdings (LSE: POLR)
M&C Saatchi (LSE: SAA)
Real Estate Investors (LSE: RLE)
Premier Miton (LSE: PMI)
Alumasc (LSE: ALU)
Jarvis Securities (LSE: JIM)
Spectra Systems (LSE: SPSY)
Appreciate (LSE: APP)
Duke Royalty (LSE: DUKE)
M Winkworth (LSE: WINK)
Figures based on Refinitiv analyst estimates
The list contains a broad mix of companies from different sectors, growth prospects and valuations. Topping the list is specialist, investment-led, fund management company Polar Capital Holdings.
Over recent months, investor sentiment towards investment and financial services companies has deteriorated. As a result, many companies in the sector have seen their share prices slump and dividend yields jump (as is the case with Premier Miton and Jarvis Securities). This is not just limited to Aim, it’s happening across the market, including blue-chip FTSE 100 companies.
This price action seems to reflect the view that these asset managers will struggle in volatile markets, and may continue to lose assets to passive fund providers. For those reasons, I’m a bit sceptical about their ability to hit dividend targets.
Real Estate Investors owns a portfolio of commercial properties and is structured as a real estate investment trust (REIT). Under REIT structure rules, the company has to return most of its property rental income to investors, which is the main reason why its yield is so high. It is also trading at a substantial discount of around 40% to the value of its assets (that’s another reason why the yield is so high).
Management is trying to close this gap by selling assets and paying down debt, and it has also hinted at special dividends to return additional capital. On that basis, I think Real Estate Investors’ dividend has strong foundations.
My favourite income stock on this list is M Winkworth. The estate agent franchisor operates an asset-light cash generative business model, which supports the company’s payout. It’s also a way to play the UK’s seemingly never-ending property bull market. The holding company takes a percentage of each franchise’s profits. These are growing inline with booming property values, suggesting Winkworth’s profits and dividend will continue to expand.
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