Dividend-paying stocks that combine healthy balance sheets with hefty yields can provide investors with steady incomes, cushion against market downturns, and grow investments at a healthy clip.
In January 2024, the top-performing dividend-payers included 4imprint Group (FOUR), QinetiQ (QQ.), and Clarksons (CKN).
To find the month’s top 10 income-focused stocks, we screened the Morningstar UK index – which measures the performance of the UK’s broad regional markets, targeting the top 97% of stocks by market capitalisation – for companies with a forward dividend yield of at least 1%, excluding real estate investment trusts.
The Best-Performing UK Dividend Stocks of January 2024
1. 4imprint Group (FOUR)
2. QinetiQ (QQ.)
3. Clarksons (CKN)
4. Next Fifteen Communications Group (NFG)
5. GSK (GSK)
6. Hikma Pharmaceuticals (HIK)
7. Plus500 (PLUS)
8. Bellway (BWY)
9. Bytes Technology Group (BYIT)
10. Bodycote (BOY)
How Have Dividend Stocks Performed Over the Past Year?
In the 12 months leading up to January 31, the Morningstar UK Dividend Yield Focus index, which tracks the performance of high-quality, dividend-paying stocks listed in the UK, rose 4.8%.
Morningstar UK vs. Morningstar UK Dividend Yield Focus Indices
Source: Morningstar Direct, February 1, 2024
The dividend yield focus index outperformed the overall UK stock market, which gained 1.8% over the 12-month period as measured by the Morningstar UK index.
Yields and Metrics for the Best-Performing Income Players
4imprint Group
Advertising agency company 4imprint Group rose 19.7% in January to end the last 12 months up 26.3%. Trading at £54.70 per share, its stock has a forward dividend yield of 2.74%. 4imprint Group pays investors an annual dividend of 204p per share. The narrow-moat stock is currently trading near its quantitative fair value estimate of £49.02 per share.
QinetiQ
Aerospace and defense firm QinetiQ rose 16.8% in January, leaving it up 0.9% over the past year. At 358p per share, its stock has a forward dividend yield of 2.21%, and an annual dividend of 12p per share. The no-moat stock is moderately undervalued, trading 6% below its quantitative fair value estimate of 379p per share.
Clarksons
Marine shipping company Clarksons gained 12.2% in January to end the last 12 months up 18.5%. The stock’s £35.50 price gives it a forward dividend yield of 2.65%. Clarksons pays investors an annual dividend of 120p per share. With a quantitative fair value estimate of £35.76 per share, the narrow-moat stock is fairly valued.
Next Fifteen Communications Group
Advertising agency firm Next Fifteen Communications Group rose 10.0% in January, leaving it down 7.2% over the past year. Trading at 915p per share, Next Fifteen Communications Group stock has a forward dividend yield of 1.62% and an annual dividend of 20p per share. The no-moat stock is trading near its quantitative fair value estimate of £11.06 per share.
GSK
Drug manufacturer GSK gained 8.1% in January to end the last 12 months up 14.1%. Trading at £15.68 per share, its forward dividend yield is 4.08%. GSK pays investors 64p per share annually. The wide-moat stock is trading at a 29% discount to its fair value estimate of £2,200 per share, leaving it significantly undervalued.
Hikma Pharmaceuticals
Drug manufacturer Hikma Pharmaceuticals gained 8.0% in January, leaving it up 15.9% over the past year. At £19.32 per share, Hikma Pharmaceuticals stock has a forward dividend yield of 2.56% and an annual dividend of 80p per share. The no-moat stock is moderately undervalued, trading 12% below its quantitative fair value estimate of £21.98 per share.
Plus500
Capital markets company Plus500 rose 7.6% in January to end the last 12 months up 0.9%. Trading at £17.90 per share, Plus500 stock has a forward dividend yield of 2.81% and an annual dividend of 240p per share. The narrow-moat stock is trading near its quantitative fair value estimate of £18.08 per share.
Bellway
Residential construction firm Bellway rose 7.5% in January, leaving it up 36.9% over the past year. Trading at £27.60 per share, Bellway stock has a forward dividend yield of 5.07% and pays investors an annual dividend of 380p per share. The no-moat stock is currently trading at a 26% discount to its fair value estimate of £34.66 per share, leaving it moderately undervalued.
Bytes Technology Group
Software company Bytes Technology Group gained 7.3% in January to end the last 12 months up 73.6%. The stock’s 656p price gives it a forward dividend yield of 1.19%. Bytes Technology Group pays investors an annual dividend of 12p per share. With a quantitative fair value estimate of 539p per share, the narrow-moat stock is significantly overvalued, trading at a 22% premium.
Bodycote
Specialty industrial machinery company Bodycote rose 7.2% in January, leaving it up 1.2% over the past year. At 638p per share, Bodycote has a forward dividend yield of 3.39% and an annual dividend of 28p per share. The no-moat stock is trading near its quantitative fair value estimate of 672p per share.
What Is the Morningstar UK Index?
The Morningstar UK index measures the performance of the UK’s broad regional markets, targeting the top 97% of stocks by market capitalisation. The index does not incorporate environmental, social, or governance criteria.
What Is the Morningstar UK Dividend Yield Focus Index?
The Morningstar UK Dividend Yield Focus index captures the performance of a portfolio of high-quality, dividend-paying securities. It’s a subset of the Morningstar UK index (which represents 97% of the equity market capitalisation) that includes only stocks that pay dividends. The stocks are screened for economic moat and financial strength compared to others in their sector. Real estate investment trusts are excluded.
The 25 highest-yielding stocks are included in the index, weighted by the dollar value of the dividends. See the full rulebook here.
The Best Dividend Stock Leaders: More Ideas to Consider
Investors who would like to uncover more top-performing or cheap dividend stocks to research further can do the following:
Review the full list of Dividend stocks included in the Morningstar UK Dividend Yield Focus index. Those dividend stocks with Morningstar Ratings of 4 or 5 stars are undervalued, according to our metrics.
Read our monthly analysis of the latest dividend moves among the top FTSE 100 dividend payers.
Use our Morningstar Screener tool to find the best dividend stocks according to your specific criteria. You can search for stocks based on their dividend yields, valuation measures such as price/earnings, and more.
Use Morningstar Portfolio Manager to build a watchlist of the best dividend stocks and create a view that allows you to easily follow the valuations, ratings, and dividend yields of the stocks in your list.
This article was edited by Lauren Solberg and reviewed by Sunniva Kolostyak.
As part of our mission to put more information into the hands of investors, this article was compiled from Morningstar’s data and independent research using automation technology. The original article was written by Morningstar reporters and editors. This updated version was reviewed by Sunniva Kolostyak.
Companies that are not formally covered by a Morningstar analyst have quantitative ratings. These companies are statistically matched to analyst-rated companies, allowing our models to calculate a quantitative moat, fair value, and uncertainty rating.
