London’s Alternative Investment Market (AIM) can be a great place to find terrific growth stocks. It can also be a happy hunting ground for investors looking for top dividend shares.
Here are two income-producing AIM stocks that have caught my attention. I’ll be looking to add them to my own investment portfolio if I have spare cash to invest.
Accrol Group Holdings
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Tissue manufacturer Accrol Group Holdings (LSE:ACRL) only carries a 1.2% dividend yield for this financial year. But City analysts are expecting shareholder payouts to grow strongly over the medium term as earnings recover.
Supply chain problems and elevated costs have smacked profits here in recent times. And they could remain an issue for the business going forwards.
But I believe the pace at which sales of its own-label products is growing still makes it a top buy. It announced a “substantial growth in volume, revenue, and profit” between May and October as the cost-of-living crisis drew shoppers away from more expensive toilet tissue brands.
Accrol’s market share leapt two percentage points year on year, to 21.5%. And I don’t believe the business is a flash in the pan. I think profits here could keep marching higher as the value retail market grows.
Analysts at IGD expect discount retail in the UK to grow 23.9% between 2022 and 2027. The steady expansion of low-cost chains like Aldi and Lidl — allied with shoppers increasingly demanding more for their money — provides Accrol with excellent revenues opportunities.
One final thing. At current prices, the company trades on a price-to-earnings growth (PEG) ratio of below 1 for each of the next three fiscal years. Such readings indicate a stock is undervalued.
Vertu Motors
Buying retail shares can be dangerous for investors as Britain’s economy struggles. The outlook is especially daunting for sellers of big-ticket items like cars.
Still, it’s my opinion that this tough landscape is baked into Vertu Motors’ (LSE:VTU) rock-bottom valuation. Today, the business trades on a forward price-to-earnings (P/E) ratio of 7.4 times.
It’s also true that the company’s extensive used-car network could help protect it from broader pressures on consumers’ wallets. Sales of its pre-owned vehicles might rise as people switch down from more expensive new models.
As a long-term investor, I believe purchasing Vertu could be a good way to capitalise on the electric vehicle (EV) boom too. This is because purchasers of these cutting-edge cars are more likely to visit a showroom for advice before buying. Vertu has 188 franchised outlets on its books following the acquisition of Helston Motors in December.
Like Accrol, Vertu is tipped to also grow dividends over the next few years. This pushes a healthy yield of 3% for the current 12-month period steadily higher.
