In this article, we will take a look at the 5 safest dividend stocks in the UK. To see more such companies, go directly to 10 Safest Dividend Stocks in the UK.
5. British American Tobacco plc (NYSE:BTI)
With a dividend yield of about 8%, British American Tobacco plc (NYSE:BTI) is one of the best UK dividend stocks to buy right now. In its Q4 earnings call, British American Tobacco’s management talked about British American Tobacco plc (NYSE:BTI)’s dividend growth policy:
“Our framework includes, continuing to grow the dividend with an average pay-out ratio of 65% over the long term, maintaining leverage within our target corridor of 2 to 3 times adjusted net debt / adjusted EBITDA, potential bolt-on M&A opportunities, and share buybacks. At this time, the Board has decided to take a pragmatic approach. Given our incremental investment plans in 2023 to further accelerate our transformation and in light of the uncertain macro environment, higher interest rates, outstanding litigation, and regulatory matters, the Board has decided to prioritize strengthening the balance sheet.”
4. National Grid plc (NYSE:NGG)
UK-based multi-national utilities company National Grid plc (NYSE:NGG) accounts for about 4.2% of the total assets of the SPDR S&P UK Dividend Aristocrats ETF. National Grid plc (NYSE:NGG) has a dividend yield of over 4% as of May 18.
National Grid plc (NYSE:NGG) recently posted its earnings and also increased its dividend.
Its FY 2023 pretax profit jumped to £3.59 billion from £3.44 billion a year earlier. National Grid plc (NYSE:NGG) declared a final dividend of 37.60 pence/share, lifting the full-year payment to 55.44 pence from 50.97 pence a year earlier.
As of the end of the fourth quarter of 2022, 12 hedge funds tracked by Insider Monkey had stakes in National Grid plc (NYSE:NGG). The biggest stakeholder of National Grid plc (NYSE:NGG) in this period was Citadel Investment Group of Ken Griffin which had a $6 million stake in the company.
Here is what ClearBridge Investments SMID Cap Growth Strategy has to say about National Grid plc (NYSE:NGG) in its Q4 2021 investor letter:
“National Grid is one of the world’s largest publicly owned utilities, focused on transmission and distribution activities in electricity and gas. National Grid performed strongly during the quarter as the business continued to de-risk following prior regulatory decisions and significant M&A. The company also benefited from falling real rates, a solid set of half-year results and strong Investor Day presentations.”
3. Schroders plc (LSE:SDR.L)
British asset management company Schroders plc (LSE:SDR.L) is one of the notable names in the SPDR S&P UK Dividend Aristocrats ETF holdings. Schroders plc (LSE:SDR.L)’s Schroder Income Growth Fund has upped its dividends for 27 straight years. Year to date Schroders plc (LSE:SDR.L) is up about 5.7%.
2. Hargreaves Lansdown plc (LSE:HL.L)
British financial services company Hargreaves Lansdown plc (LSE:HL.L) is a part of the SPDR S&P UK Dividend Aristocrats ETF. Hargreaves Lansdown’s management during the company’s Q4 earnings call touched up the topic of dividends:
“The tough external environment impacted net new business in the period, but clients have used our diversified service to continue to save during this time, driving £1.6 billion of net inflows. And this, together with market movements drove AUA to £127.1 billion, up 2.7% since our full year results. The diversity of our business model is reflected in our financial performance with record revenue hitting £350 million, up 20% on 2021 and profit hitting £198 million, also a record for a first half, and our interim dividend has risen by 3%.”
1. BAE Systems plc (LSE:BA.L)
Defense contractor BAE Systems plc (LSE:BA.L) is an important holding of the SPDR S&P UK Dividend Aristocrats ETF. While the company suspended its dividend payments in 2020, its growth prospects look strong for the future. BAE Systems plc (LSE:BA.L) has a payout ratio of about 50% and the company plans to buy back GBP 1.5 billion of its own shares over the next 3 years.
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