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The appeal of dividend stocks in the United Kingdom, where the average yield hovers around 3.8%, can be quite enticing for those looking to generate income from their investments. However, it's crucial to scrutinize the sustainability of these dividends. Companies like Entain, with high payout ratios, may signal a red flag that their dividends could be at risk, potentially impacting investor returns adversely. In this article, we will explore two such stocks: one that offers promising returns and another that investors might consider avoiding due to concerns about its dividend sustainability.
Top 10 Dividend Stocks In The United Kingdom
| Name | Dividend Yield | Dividend Rating |
| James Latham (AIM:LTHM) | 6.35% | ★★★★★★ |
| Impax Asset Management Group (AIM:IPX) | 7.28% | ★★★★★☆ |
| Dunelm Group (LSE:DNLM) | 7.33% | ★★★★★☆ |
| DCC (LSE:DCC) | 3.55% | ★★★★★☆ |
| Plus500 (LSE:PLUS) | 5.87% | ★★★★★☆ |
| Grafton Group (LSE:GFTU) | 3.88% | ★★★★★☆ |
| Big Yellow Group (LSE:BYG) | 3.85% | ★★★★★☆ |
| Rio Tinto Group (LSE:RIO) | 6.42% | ★★★★★☆ |
| NWF Group (AIM:NWF) | 4.42% | ★★★★★☆ |
| Hargreaves Services (AIM:HSP) | 6.74% | ★★★★★☆ |
Click here to see the full list of 56 stocks from our Top Dividend Stocks screener.
Here we highlight one of our preferred stocks from the screener and one that could be better to shun.
Top Pick
Mincon Group
Simply Wall St Dividend Rating: ★★★★☆☆
Overview: Mincon Group plc specializes in designing, manufacturing, selling, and servicing rock drilling tools and associated products across Ireland, the Americas, Australasia, Europe, the Middle East, and Africa with a market capitalization of £99.86 million.
Operations: The company generates €156.93 million in revenue from the sale of drilling equipment.
Dividend Yield: 3.8%
Mincon Group's dividend attractiveness is nuanced, with a solid yield of 3.79% but below the UK market's top quartile at 5.7%. The company's dividends are well-supported by earnings and cash flows, with payout ratios of 59.7% and 36.8%, respectively, indicating more sustainability compared to firms with higher risks from excessive payout ratios. However, Mincon has experienced volatility in its dividend payments over the past decade, reflecting some instability despite recent coverage strengths. Additionally, recent trading updates suggest a continued challenging market environment as of early 2024.
One To Reconsider
Entain
Simply Wall St Dividend Rating: ★★☆☆☆☆
Overview: Entain Plc is a sports-betting and gaming company with a market capitalization of approximately £4.03 billion.