Investing in high-yield AIM stocks

Chris Boxall, from Fundamental Asset Management, explains what’s involved in investing in AIM stocks with the aim of achieving high yield, as well as the process for inheritance tax planning.

The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results

Traditionally, investing in Alternative Investment Market (AIM)-listed stocks meant investing for growth. The small companies were either likely to grow or go under, and the fight for survival often meant that there were rich pickings but with higher risks.

More recently, it has been possible to invest on AIM for yield. Companies listed on London’s junior stock market have become more aware of the need to reward investors with regular dividends.

More importantly, the AIM market has been a place where an investor can pick stocks that qualify for inheritance tax (IHT) relief. Not all shares that trade on AIM qualify, but so long as the stock is on the tax authorities’ preferred list, it is possible to leave these in a will without the need to have them included in an estate’s tax liability.

Here, Chris Boxall, an AIM list portfolio manager, discusses some of the stocks to watch. He has compiled a portfolio that we at IG will follow throughout the year, while he will comment on this list of 14-high yield plays.

At the time of broadcast, the portfolio had an average forecast dividend yield of 5.9%, the lowest at 4.2%, the highest 7.8%. Meanwhile, the average market capitalisation is £125 million, ranging from £34.4 million to £522.9 million.

This time around, Boxall picks K3 Capital Group, Manx Telecom, Shoe Zone, NAHL and Elegant Hotels to discuss. While these are all high yielding, there is also the opportunity to bag growth alongside the regular payments to long-term shareholders.

As is always the case, any investment comes with risk. Boxall highlights the need to do due diligence on all stocks in any investment portfolio. 

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