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 May 2024, the top-performing dividend-payers included aerospace and defense company QinetiQ (QQ.), asset management firm Hargreaves Lansdown (HL.), and telecom services firm BT Group (BT.A).
To find the month's 10 best-performing 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 1.5%, excluding real estate investment trusts.
The Best-Performing UK Dividend Stocks of May 2024
1. QinetiQ (QQ.)
2. Hargreaves Lansdown (HL.)
3. BT (BT.A)
4. AJ Bell (AJB)
5. Kainos Group (KNOS)
6. Hays (HAS)
7. IntegraFin Holdings (IHP)
8. St. James's Place (STJ)
9. Bank of Cyprus (BOCH)
10. Bytes Technology Group (BYIT)
How Have Dividend Stocks Performed?
The Morningstar UK Dividend Yield Focus Index, which tracks the performance of high-quality, dividend-paying stocks listed in the UK, rose 4.2% over the past month and 11.1% over the past year.
The overall UK stock market, as measured by the Morningstar UK Index, has gained 2.4% on the month and 15.6% on the year.
Yields and Metrics for May's Best-Performing Dividend Stocks
QinetiQ
Aerospace and defense company QinetiQ rose 30.2% in May and gained 26.6% over the past 12 months. Trading at £4.55 per share, its stock has a forward dividend yield of 1.81%. QinetiQ pays investors an annual dividend of 8p per share. The stock has a quantitative Morningstar Rating of 3 stars.
Hargreaves Lansdown
Asset management firm Hargreaves Lansdown rose 29.7% in May and gained 36.8% over the past 12 months. At £10.64 per share, its stock has a forward dividend yield of 3.95% and an annual dividend of 40p per share. It has a quantitative Morningstar Rating of 3 stars. Both Hargreaves and BT (below) featured in this month’s best performing stock list.
BT
Telecom services firm BT gained 27.3% in May and fell 5.8% over the past 12 months. The stock's £1.33 price gives it a forward dividend yield of 6.03%. BT pays investors an annual dividend of 8p per share. With a fair value estimate of £2 per share and a narrow economic moat, the stock is moderately undervalued, trading at a 34% discount. It has a Morningstar Rating of 4 stars.
AJ Bell
Asset management firm AJ Bell rose 19.0% in May and gained 24.0% over the past 12 months. Trading at £3.92 per share, AJ Bell stock has a forward dividend yield of 2.94% and an annual dividend of 11p per share. It has a quantitative Morningstar Rating of 3 stars.
Kainos Group
Software application firm Kainos Group gained 17.4% in May and fell 8.2% over the past 12 months. Trading at £11.76 per share, its forward dividend yield is 2.32%. Kainos pays investors 24p per share annually. It has a quantitative Morningstar Rating of 3 stars.
Hays
Staffing and employment services firm Hays gained 17.1% in May and rose 5.1% over the past 12 months. At £1.08 per share, Hays stock has a forward dividend yield of 2.79% and an annual dividend of 3p per share. It has a quantitative Morningstar Rating of 3 stars.
IntegraFin
Asset management firm IntegraFin rose 17.0% in May and gained 43.6% over the past 12 months. Trading at £3.60 per share, IntegraFin stock has a forward dividend yield of 2.83% and an annual dividend of 10p per share. It has a quantitative Morningstar Rating of 3 stars.
St. James's Place
Asset management firm St. James's Place rose 14.7% in May but has lost 53.1% over the past 12 months. Trading at £5.23 per share, St. James's Place stock has a forward dividend yield of 4.56% and pays investors an annual dividend of 53p per share. The stock has a quantitative Morningstar Rating of 3 stars.
Bank of Cyprus
Bank of Cyprus gained 14.6% in May and rose 77.0% over the past 12 months. The stock's £3.66 price gives it a forward dividend yield of 5.86%. The bank pays investors an annual dividend of 5p per share. The stock has a quantitative Morningstar Rating of 3 stars.
Bytes Technology Group
Software infrastructure firm Bytes Technology Group rose 14.4% in May and gained 12.5% over the past 12 months. At £5.62 per share, Bytes has a forward dividend yield of 1.55% and an annual dividend of 8p per share. It has a quantitative Morningstar Rating of 3 stars.
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.
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.
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.
This article was compiled by Bella Albrecht, 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 an editor.
