Income is in favour, according to broker Liberum, which delivered its monthly assessment of the small and mid-cap sector.
Analyst Sebastian Jory revealed out that high yielding stocks have outperformed ‘lower yielders’ by 20% over the last year.
He also pointed out the FTSE 250 dividend yield is at a record high. “Alongside M&A, dividend upgrades are an important source of upside at UK small and mid-caps,” added Jory.
He screened for stocks not only paying well, but have the scope to grow the dividend further and came up with three key picks – the fund manager Jupiter (LON:JUP), the consultant RPS (LON:RPS) and builder Bellway (LON:BWY).
He said Jupiter is yielding 6.5% a year and yet is growing at a compound annual rate of 13%, while RPS is expanding at a compound 14% and yields 3.5%.
Bellway, meanwhile, has a dividend yield of 3.3% and growing at a compound annual rate of 22%.