Monday 9 September 2019 12:01 am

Dividends for AIM-listed firms soar to record heights

The dividends paid by companies listed on the stock exchange’s Alternative Investment Market (AIM) exchange reached record highs in the first half of the year, and are on track to beat 2018’s record full-year total of £1.1bn.

First-half AIM dividends climbed 23.9 per cent year on year to £633m, according to new figures from Link Group. Excluding one-off special payments, dividends were £571m, a 13.9 per cent rise. Just under half of this increase was contributed by new listings to AIM.

Dividends for the exchange – which has over 1,200 listings including Asos, Burford Capital, and Fevertree – have tripled since 2012. This is compared to a 45 per cent increase for main-market dividends during the same period. 

Excluding companies that do not pay a dividend, AIM listings will yield 2.5 per cent this year, slightly behind mid-caps on London’s main exchange. Dividend payers in the FTSE100 collectively yield returns of 4.5 per cent.

“Fewer AIM companies pay dividends than their main-market counterparts, simply because so many are still in their early capital-hungry phase,” said Link Market Services chief operating officer Michael Kempe. “But not only has the proportion of AIM companies paying dividends risen, but those coming to market are doing so earlier, and those paying them are growing their dividends rapidly.”

“Dividend growth matters because it lies at the heart of share valuations. The faster the growth rate, the higher the value. And the more visible the dividend stream, the more certain an investor can be about its value,” Kempe continued.

Despite the significant growth in AIM dividends, the entirety of the exchange is still worth relatively little overall. All AIM payouts for the past 12 months only slightly exceeded the dividend of Reckitt Benckiser, the 21st largest listing on the main market.

Link’s full-year forecast forecasting for total AIM payouts remains at £1.33bn, a 16.8 per cent increase on last year’s figure.