How smaller companies can improve dividends

INVESTMENT TRUSTS

The UK Smaller Companies sector can yield more than the market as a whole

Investors and their advisers often harbour unchallenged assumptions about certain types of investment. Certain sectors, such as utilities, are seen as ‘income’ sectors. Others, such as technology, are classed as ‘growth’ sectors. The same is often true of company size: large companies are assumed to be better for income seekers, while smaller companies are more suitable for the growth investor. These generalisations are not entirely misplaced. Many smaller companies are at a relatively early stage of their development, where it is more important to plough any profits back into the bus...