2 high-paying dividend stocks on AIM: a risk or a reward?

first_imgSimply click below to discover how you can take advantage of this. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. In January it reported a rise in full-year revenue, but profits fell because of price hikes in British business rates.Its dividend yield is an attractive 6% but I’m not convinced it’s worth the risk. Unfortunately, this is another British retailer at the mercy of high business rates and decreased footfall. Shining brightWith gold prices heading north, it may tempt you to invest in a gold mining company.Highland Gold Mining is an AIM-listed stock with a £766m market cap. It offers a 5% dividend yield, while it’s P/E is 11 and earnings per share are 19p. Enter Your Email Address See all posts by Kirsteen Mackay Kirsteen Mackay | Monday, 3rd February, 2020 | More on: HGM SHOE I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. The AIM financial index is often described as the Wild West of the investing arena. With good reason too. Every year, shareholders can lose thousands of pounds on AIM and some of its constituents go bust. So are there any contenders worth investing in?Two big dividend payers on AIM are Shoe Zone (LSE:SHOE) and Highland Gold Mining (LSE:HGM). Let’s take a closer look at their financial outlook. 5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…One step forward, two steps backShoe Zone appears on many British high streets. It’s a warehouse-style store filled with cheap and cheerful shoes for all the family.The Shoe Zone share price is up 12% year-to-date. This could, in part, be thanks to the ‘Boris bounce’, which has boosted many high street retailers after the Conservative election win in December.It employs over 4,000 people in over 500 stores throughout the UK and Ireland. Shoe Zone has a £90m market cap, and its price-to-earnings ratio (P/E) is 16, but its earnings per share have fallen to 11.4p from 19p in 2018.center_img “This Stock Could Be Like Buying Amazon in 1997” Our 6 ‘Best Buys Now’ Shares Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. 2 high-paying dividend stocks on AIM: a risk or a reward? It’s worth noting that its dividend cover is less than 1, which is not ideal. This means the dividend could be at risk of a future cut.Prior to December, Highland Gold was selling its gold to commercial banks. Now it’s become a producer on the MOEX Precious Metals Market in Moscow. It’s the first gold producer to do so and it means an additional income stream through this supplementary market.Highland’s total gold production through the first nine months of 2019 increased by 7% compared to the same period in 2018.The share price is up nearly 30% in the past year, but it’s a volatile stock to own. With gold prices as high as they are, I’d be concerned of a pull-back if the gold price goes into decline. I think this is too risky for me.AIM: on target?AIM shares are listed on the London Stock Exchange, just like the FTSE 350 companies. AIM shares are much riskier than FTSE shares because there is usually less liquidity in the market.  This means they can be difficult to sell quickly. Choosing AIM stocks with a dividend is a good strategy in theory, because the dividend yield brings additional returns to your investment, helping to offset any associated risk. As much as I love both gold and shoes, I think we can find safer share purchases, with attractive dividend yields, among the FTSE 350 stocks. I like that both these companies have been established for a while. However, they each have very low dividend cover and a volatile share price history. They’re not for me.  Kirsteen has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Image source: Getty Images. last_img read more