3 yield opportunities in small and mid-cap land

Financial Journalist
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Key points

  • There are interesting yield opportunities in small- and mid-cap land for experienced investors, who are willing to take slightly higher risks for higher returns.
  • Wilson Asset Management’s WAM Capital LIC has consistently outperformed its benchmark S&P/ASX All Ordinaries Accumulation Index and grown dividends each year since the 2008 GFC.
  • The Russell High Dividend Australian Shares ETF and the Contango MicroCap LIC also offer strong yields.

These are crazy markets. The great global experiment of quantitative easing and secular stagnation in developed markets (weak demand and overcapacity) has distorted interest rates, and an ageing population has increased demand for higher-yielding securities.

That is not to say markets cannot rally. I believe markets are in the second stage of a bull market, characterised by slowly improving earnings. We are still a long way from the third stage of excess, where taxi drivers want share tips and friends quit their jobs to day-trade.

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