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UK Dividend Aristocrats List: 2023 Rankings by Yield

Ramish Cheema
Updated 9 min read

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In this piece, we will take a look at U.K. aristocrats ranked by dividend yield. For more stocks, head on over to U.K. Dividend Aristocrats List: 2023 Rankings by Yield.

Dividend stocks with solid growth history remain the safest and reliable stocks to invest in this year, thanks to rising volatility, inflation and uncertainty that have made financial markets extremely vulnerable. As opposed to buying and selling regular stocks with the hopes of profiting from share price growth or drops, dividend stocks pay out a portion of a firm's income periodically to investors. There are several kinds of dividend stocks, which include master limited partnerships (MLPs), real estate investment trusts (REITs), preferred dividend paying stocks, and common dividend paying stocks. Out of thee, MLPs and REITs are special companies that pay little corporate taxes as they are legally required to funnel most of their profits to investors as dividends.

In fact, shares of these two are called units, since they entitle the owner to a piece of income. On the other hand, preferred dividend paying stocks do not entitle a holder to any decision making leverage in the company, with the only guarantee being a dividend income if the board decides. Common dividend stocks are the same except they also count as a vote in decision making. Finally, the management of stock companies is not required to pay dividends, and choosing to do so is their discretion depending on a firm's growth plans and other considerations.

Additionally, within the dividend paying stocks themselves, there are two primary categories. These are dividend aristocrats and dividend champions. The former (when talking about U.S. stocks) are firms that have grown their dividends for the past 25 years and are part of the Standard and Poor 500 index. The latter are those firms that have grown their dividends for 25 years without being a part of the S&P 500. If 25 years of dividend growth was not enough to excite you, then the top slot of the food chain in the dividend stock categorization belongs to dividend kings - firms that have grown their dividends consecutively for five decades. There's another important category of dividend growers known as dividend challengers, which are firms that have been growing their dividends for at least the past five years. Who knows, some of the challenges of today could very well be the kings of tomorrow!

Zooming in on the British economy, the U.K. seems to be on a road to recovery after being dealt a host of devastating shocks last year. The Russian invasion of Ukraine hit the country the hardest, especially its natural gas and power sector which saw prices jump to record levels and strained the budgets of both businesses and the everyday consumer. Inflation in Great Britain peaked at a painful 11.1% in October 2022, but it has been on a downward trajectory since then with the latest figures for February 2023 seeing the CPI rising to 10.4% annually. This was however a shock for analysts and economists, as the figure had previously dropped to 10.1% in January causing cheer that the upward trend had finally been broken. The rise was particularly worrying since inflation had also risen to 9.2% in February, as the latest rise indicated that a trend was building as opposed to a one off occurrence.

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