Top 3 UK Dividend Stocks To Watch

London’s stock market has faced challenges recently, with the FTSE 100 closing lower on weak trade data from China and worries about the global economic recovery. Despite these issues, dividend stocks remain an attractive option for investors looking for stable income and long-term growth potential. In this article, we’ll explore three of the top UK dividend stocks to watch in the current market environment.

10 Top Dividend Stocks In The UK

Click here to see the full list of 57 stocks from the UK’s Top Dividend Stocks screener.

We will review the selection from our screener results.

Ratings of the company Simply Wall St. ★★★★☆☆

Summary: MP Evans Group PLC, with a market capitalization of £454.43 million, operates through subsidiaries to own and develop oil palm plantations in Indonesia and Malaysia.

Operation: MP Evans Group PLC generated a profit of $307.32 million from its plantation operations in Indonesia.

Dividend Yield: 4.9%

MP Evans Group’s dividend payout, which is covered by earnings (58.7%) and cash flow (64.3%), has grown over the past decade but remains unstable and below the top 25% of UK dividend payers. Recent production results indicate increased production of crude palm oil and palm kernel oil, supporting future gains. In addition, a share buyback program authorizes up to £2 million of shares, potentially increasing shareholder value through a reduced number of shares and earnings per share metrics.

Ratings of the company Simply Wall St. ★★★★☆☆

Summary: Macfarlane Group PLC, with a market capitalization of £187.06 million, designs, manufactures and distributes protective packaging products to businesses in the UK and Europe through its subsidiaries.

Operation: Revenue Segment (millions of £): Packaging Distribution: 231.89, Production Operations: 42.06

Dividend Yield: 3.1%

Macfarlane Group offers a dividend yield of 3.06%, lower than the UK’s top dividend payer, but the payout ratio is sustainable with earnings coverage at 39% and cash flow coverage at 22.8%. Despite a track record of unstable dividends over the past decade, the recent increase to 0.96 pence per share indicates growth potential. The stock is trading at a good valuation, currently 39% below fair value estimates, and analysts are predicting a 27.1% upside.

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Ratings of the company Simply Wall St. ★★★★☆☆

Summary: M&G Credit Income Investment Trust plc invests in a diverse portfolio of public and private debt and debt-like instruments, with a market capitalization of £135.80 million.

Operation: M&G Credit Income Investment Trust plc generated revenue mainly from the financial services segment, mainly through closed-end funds, amounting to £15.36 million.

Dividend Yield: 8.4%

M&G Credit Income Investment Trust’s dividend yield is 8.36% per month. Although the company has only paid dividends for five years, recent payments have increased, including an interim dividend of 2.15 pence per share announced in July 2024. Despite a volatile and unstable record, the dividend is covered by both earnings (payout ratio 84.8%) . and cash flow (57.8% cash payout ratio). The stock’s price-to-earnings ratio is better at 10.2x compared to the UK market average of 16.9x.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock, and does not take into account your goals, or your financial situation. We aim to bring long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the most price-sensitive company announcements or qualitative material. Only Wall St does not have a position in the mentioned stocks.

Companies discussed in this article include AIM:MPE LSE:MACF and LSE:MGCI.

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