The following AIM companies provide something for both growth and dividend investors to celebrate. Here’s why I’d buy these small-cap income stocks for my Stocks and Shares ISA in 2023.
Ramsdens Holdings
Dividends forecasts for many UK shares appear in danger as the global economy cools. But pawnbroking specialist Ramsdens Holdings is one stock that should still be able to deliver robust shareholder payouts in the current climate. The yield here for 2023 sits at 4.3%.
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Revenues at the small-cap jumped 62% in the 12 months to September as it recovered from the pandemic and the cost-of-living crisis worsened. It announced last week that trading in the first quarter of the current financial year had started robustly. The firm’s pawnbroking loan book continued to grow while gross profits at its jewellery retail business rose 15%.
A sharp fall in inflation could hamper Ramsden’s near-term profits growth. But as things stand the company looks set for another year of solid progress.
Alliance Pharma
Dividends from healthcare business Alliance Pharma grew strongly until they were cut during the pandemic. Annual payouts rose at least 10% in the nine years to 2018.
Shareholder rewards have grown again from 2020 and I’m expecting them to keep chugging higher. You see this share has a large portfolio of popular medical products like Kelo-Cote scar treatment gel and the Nizoral dandruff battler. And the business is gradually rolling out these winning brands in growth markets like China and the US.
I’d buy Alliance shares despite the huge competition that many of its products face. The dividend yield here for 2023 sits at 2.9%.
Sylvania Platinum
Buying shares in mining businesses like Sylvania Platinum can be a bumpy ride for investors. Their earnings are linked closely to the performance of commodity markets that can rise and fall sharply.
But as a long-term investor I find this South Africa-focused company highly appealing. This is because demand for the platinum group metals (or PGMs) it produces looks set to surge as the green economy expands.
The company’s metals are used to filter out harmful emissions from car exhaust systems. Platinum is also a key component in the production of green hydrogen. I’d buy Sylvania today too because of its bulky 6.7% dividend yield for 2023.
Begbies Traynor
Buying counter-cyclical companies like Begbies Traynor could be a good investment idea as the UK economy struggles. Latest financials showed revenues and adjusted pre-tax profits up 12% and 13% as demand for insolvency-related services jumped.
This is a stock I’d buy to hold for the long term. The company’s ambitious approach to acquisitions has driven prolonged double-digit annual earnings growth and could continue to do so. It has significant liquidity with which to pursue further investments.
I’d buy Begbies shares even though acquisition-led strategies can expose companies to unknown, profits-sapping risks. The dividend yield here sits at 2.6%.
