In This Article:
Dividend stocks can be an appealing choice for investors seeking regular income, particularly in the United Kingdom where the average yield hovers around 3.9%. However, it's crucial to examine the sustainability of these dividends. Companies with excessively high payout ratios may struggle to maintain their dividend payments, which could pose a risk to investors' capital. In this discussion, we will explore why certain stocks like Dowlais Group might not be ideal for your dividend portfolio due to such financial strains.
Top 10 Dividend Stocks In The United Kingdom
| Name | Dividend Yield | Dividend Rating |
| James Latham (AIM:LTHM) | 6.38% | ★★★★★★ |
| Impax Asset Management Group (AIM:IPX) | 7.10% | ★★★★★☆ |
| Keller Group (LSE:KLR) | 3.56% | ★★★★★☆ |
| DCC (LSE:DCC) | 3.53% | ★★★★★☆ |
| Plus500 (LSE:PLUS) | 5.82% | ★★★★★☆ |
| Grafton Group (LSE:GFTU) | 3.90% | ★★★★★☆ |
| Big Yellow Group (LSE:BYG) | 3.87% | ★★★★★☆ |
| Rio Tinto Group (LSE:RIO) | 6.43% | ★★★★★☆ |
| NWF Group (AIM:NWF) | 4.39% | ★★★★★☆ |
| Hargreaves Services (AIM:HSP) | 6.67% | ★★★★★☆ |
Click here to see the full list of 56 stocks from our Top Dividend Stocks screener.
We'll examine a selection from our screener results and one of the companies to potentially avoid.
Top Pick
London Security
Simply Wall St Dividend Rating: ★★★★☆☆
Overview: London Security plc is an investment holding company that operates in the fire protection sector, manufacturing, selling, and renting equipment across several European countries, with a market capitalization of approximately £386.19 million.
Operations: The company generates revenue primarily through the provision and maintenance of fire protection and security equipment, totaling £219.71 million.
Dividend Yield: 3.7%
London Security's dividend yield of 3.7% is lower than the top UK dividend payers, and its history shows volatility in payments over the last decade, reflecting some instability. However, it maintains a healthier payout scenario with a 65.3% earnings coverage and 79.8% cash flow coverage, ensuring dividends are sustainably funded by both profits and cash reserves. Recent board affirmations to maintain the £0.42 per share dividend further reflect a commitment to steady shareholder returns despite past fluctuations.
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Navigate through the intricacies of London Security with our comprehensive dividend report here.
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The valuation report we've compiled suggests that London Security's current price could be inflated.
One To Reconsider
Dowlais Group
Simply Wall St Dividend Rating: ★★☆☆☆☆
Overview: Dowlais Group plc is a manufacturer and seller of automotive parts operating across the United Kingdom, Europe, North America, South America, Asia, and Africa, with a market capitalization of approximately £0.96 billion.