UK Top 40 Quality Dividend Stocks: Summer 2024

dividend stocks Jul 03, 2024
UK Top 40 Quality Dividend Stocks: Summer 2024

Welcome to the summer 2024 edition of the UK Top 40 Quality Dividend Stocks list.

As I'm sure you're aware (unless you've been hiding under a rock on the dark side of the moon), the UK is about to hold another general election, and although this is important to me as a citizen of the UK, it isn't all that important to me as an investor.

That's because I'm a long-term investor, which means I expect to hold each investment for at least five years, and often much longer. Over that sort of timeframe, the actions and policies of any one government become less important, and it becomes more important to invest in companies that can succeed regardless of which party is in power at any specific moment in time. 

And, as Forest Gump once said, that's all I have to say about that.

Turning back to the topic of dividend stocks, the good news is that the UK remains an attractive market for dividend investors, with the FTSE 100 (at 8,100) offering a dividend yield of 3.8% and the FTSE 250 (at 20,200) offering a dividend yield of 3.4%. Even better, the average yield across the UK's top 40 progressive dividend stocks (listed below) is a very healthy 4.6%.

That's a lower yield than you can get from a savings account (where yields for fixed-term accounts are still close to 5%), and that's why a lot of people are choosing savings accounts when they're revisiting the age-old dividends vs savings question.

But don't forget that companies usually retain some of their earnings to fund expansion and growth, so dividends have (on average) grown ahead of inflation over the medium and long term, while the income from a savings account is typically fixed and unchanging. And with inflation still somewhat elevated, this is an important factor to consider.

Unfortunately, UK investors have had to suffer weak or negative capital gains in recent years to get those high yields. Alas, this is the inevitable double-edged sword of investing, where you can rarely have high income and high growth at the same time. It's almost always one or the other, with the US currently seeing a lot of growth and very little income, while the UK is producing quite a lot of income with not so much growth.

It's a case of horses for courses and, as an income-focused investor, I'm sticking with the UK.

Last but not least, I should also mention that I'm working on a review of BAE Systems, which is in 14th place on the top 40 list and has seen dramatic share price gains since Russia invaded Ukraine. I'm hoping to publish that review at some point in July and, in the meantime, here are the UK's top 40 quality dividend stocks.

No. Name (and link to review) EPIC Index Sector Share Price Dividend Yield (%)
1 British American Tobacco PLC BATS FTSE 100 Tobacco £24.51 9.4
2 Legal & General Group PLC LGEN FTSE 100 Life Insurance £2.29 8.9
3 National Grid PLC NG. FTSE 100 Gas, Water and Multi-utilities £8.85 5.1
4 Phoenix Group Holdings PHNX FTSE 100 Life Insurance £5.33 9.9
5 Reckitt Benckiser Group PLC RKT FTSE 100 Personal Care, Drug and Grocery Stores £42.89 4.5
6 Unilever PLC ULVR FTSE 100 Personal Care, Drug and Grocery Stores £43.45 3.4
7 Schroders PLC SDR FTSE 100 Investment Banking and Brokerage Services £3.63 5.9
8 Diageo PLC DGE FTSE 100 Beverages £24.80 3.2
9 United Utilities Group PLC UU. FTSE 100 Gas, Water and Multi-utilities £9.87 5.0
10 Severn Trent PLC SVT FTSE 100 Gas, Water and Multi-utilities £23.94 4.9
11 IG Group Holdings PLC IGG FTSE 250 Investment Banking and Brokerage Services £8.22 5.5
12 Ashmore Group PLC ASHM FTSE 250 Investment Banking and Brokerage Services £1.71 9.9
13 Smurfit Kappa Group PLC SKG FTSE 100 General Industrials £35.42 3.6
14 BAE Systems PLC BA. FTSE 100 Aerospace and Defense £12.72 2.4
15 Rathbone Brothers PLC RAT FTSE 250 Investment Banking and Brokerage Services £16.78 5.2
16 Smith & Nephew PLC SN. FTSE 100 Medical Equipment and Services £9.76 3.1
17 AstraZeneca PLC AZN FTSE 100 Pharmaceuticals and Biotechnology £123.04 1.9
18 Liontrust Asset Management PLC LIO Small Cap Investment Banking and Brokerage Services £6.83 10.5
19 Polar Capital Holdings PLC POLR AIM UK 50 Investment Banking and Brokerage Services £5.79 7.9
20 Hargreaves Lansdown PLC HL. FTSE 100 Investment Banking and Brokerage Services £11.27 3.7
21 DCC PLC DCC FTSE 100 Industrial Support Services £55.75 3.5
22 IMPAX Asset Management Group PLC IPX AIM UK 50 Investment Banking and Brokerage Services £3.84 7.2
23 RWS Holdings PLC RWS AIM UK 50 Industrial Support Services £1.86 6.6
24 Mony Group PLC MONY FTSE 250 Software and Computer Services £2.23 5.4
25 Chesnara PLC CSN Small Cap Life Insurance £2.47 9.7
26 Telecom plus PLC TEP FTSE 250 Telecommunications Service Providers £17.64 4.7
27 Bunzl PLC BNZL FTSE 100 General Industrials £29.92 2.3
28 RELX PLC REL FTSE 100 Media £35.77 1.6
29 Pets at Home Group PLC PETS FTSE 250 Retailers £2.99 4.3
30 Intertek Group PLC ITRK FTSE 100 Industrial Support Services £47.34 2.4
31 RS Group PLC RS1 FTSE 250 Industrial Support Services £6.87 3.2
32 Croda International PLC CRDA FTSE 100 Chemicals £38.99 2.8
33 Hikma Pharmaceuticals PLC HIK FTSE 100 Pharmaceuticals and Biotechnology £18.67 3.0
34 M.P. Evans Group PLC MPE AIM UK 50 Food Producers £8.60 5.2
35 Ocean Wilson Holdings PLC OCN Small Cap Industrial Transportation £12.90 5.2
36 Sage Group (The) PLC SGE FTSE 100 Software and Computer Services £10.74 1.8
37 James Halstead PLC JHD AIM UK 50 Construction and Materials £1.80 4.4
38 London Stock Exchange Group PLC LSEG FTSE 100 Investment Banking and Brokerage Services £93.04 1.2
39 City of London Investment Group PLC CLIG Small Cap Investment Banking and Brokerage Services £3.70 8.9
40 Spirax Group PLC SPX FTSE 100 Industrial Engineering £84.50 1.9

Notes:

  1. The data for this list is kindly provided by SharePad
  2. If you're reading this in the future, you can download the latest version of the list in PDF format here: UK Top 40 Quality Dividend Stocks
  3. This list is a starting point for further analysis and is not a recommendation to buy or sell any specific stock

Here's a summary of the sort and select rules used to build the list:

Select stocks that:

  1. Are constituents of the FTSE 100, FTSE 250, FTSE Small-Cap, FTSE Fledgling or AIM UK 50 indices
  2. Paid a dividend every year for the last ten years
  3. Held or raised their dividend in every one of the last ten years

Sort those stocks by:

  1. Size: Assign each stock a size rank, with the highest market cap having a size rank of 1
  2. Yield: Assign each stock a yield rank, with the highest yield having a yield rank of 1
  3. Size and Yield: Sum the size and yield rank for each stock; sort the list by the combined rank in ascending order so the stock with the best combination of large size and high dividend yield is at the top of the list
  4. Top 40: Remove stocks outside the top 40

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