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 the first quarter of 2024, the top-performing dividend-payers included software infrastructure firm Spirent Communications (SPT), advertising agency 4imprint Group (FOUR), and Virgin Money UK (VMUK).
To find the quarter'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 Q1 2024
1. Spirent Communications (SPT)
2. 4imprint Group (FOUR)
3. Virgin Money UK (VMUK)
4. Beazley Group (BEZ)
5. DS Smith (SMDS)
6. Bank of Georgia Group (BGEO)
7. Clarksons (CKN)
8. NatWest Group (NWG)
9. Barclays (BARC)
10. Just Group (JUST)
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 2.7% over the past month and 6.4% over the past year.
The overall UK stock market, as measured by the Morningstar UK index, has gained 3.5% on the quarter and 8.3% on the year.
Yields and Metrics for Q1's Best-Performing Dividend Stocks
Spirent Communications
Software infrastructure firm Spirent Communications rose 62.2% in the first quarter and gained 16.6% over the past 12 months. Trading at £2 per share, its stock has a forward dividend yield of 3.13%. Spirent Communications pays investors an annual dividend of 8p per share. The stock, which has no economic moat, is currently trading near its quantitative fair value estimate of £2.43 per share, leaving it with a quantitative Morningstar Rating of 3 stars.
4imprint Group
Advertising agency 4imprint Group rose 38.7% in the first quarter and gained 37.9% over the past 12 months. At £63.40 per share, its stock has a forward dividend yield of 2.65% and an annual dividend of £1.63 per share. The stock, which has a narrow economic moat, is moderately overvalued, trading 20% above its quantitative fair value estimate of £53.03 per share. It has a quantitative Morningstar Rating of 2 stars.
Virgin Money UK
The bank Virgin Money gained 31.3% in the first quarter and rose 50.2% over the past 12 months. The stock's £2.14 price gives it a forward dividend yield of 2.48%. Virgin Money pays investors an annual dividend of 11p per share. With a fair value estimate of £2.56 per share and no economic moat, the stock is fairly valued and has a Morningstar Rating of 3 stars. You can read more about Morningstar’s view on Nationwide’s recent bid to acquire Virgin Money in this article.
Beazley
Specialty insurance firm Beazley rose 30.2% in the first quarter and gained 13.8% over the past 12 months. Trading at £6.66 per share, Beazley stock has a forward dividend yield of 2.13% and an annual dividend of 17p per share. The stock, which has a narrow economic moat, is trading near its quantitative fair value estimate of £7.07 per share. It has a quantitative Morningstar Rating of 3 stars.
DS Smith
Packaging and containers company DS Smith gained 29.1% in the first quarter and rose 31.9% over the past 12 months. Trading at £3.97 per share, its forward dividend yield is 4.54%. DS Smith pays investors 18p per share annually. The stock, which has no economic moat, is trading near its quantitative fair value estimate of £3.93 per share. It has a quantitative Morningstar Rating of 3 stars.
Bank of Georgia Group
Bank of Georgia gained 27% in the first quarter and rose 93.4% over the past 12 months. At £50.50 per share, Bank of Georgia stock has a forward dividend yield of 5.3% and an annual dividend of £8.87 per share. The stock, which has no economic moat, is trading near its quantitative fair value estimate of £49.88 per share. It has a quantitative Morningstar Rating of 3 stars.
Clarksons
Marine shipping firm Clarksons rose 26.7% in the first quarter and gained 32.8% over the past 12 months. Trading at £40.10 per share, Clarksons stock has a forward dividend yield of 2.54% and an annual dividend of 93p per share. The stock, which has a narrow economic moat, is trading near its quantitative fair value estimate of £39.52 per share. It has a quantitative Morningstar Rating of 3 stars.
NatWest Group
NatWest rose 26.3% in the first quarter and gained 7.2% over the past 12 months. Trading at £2.65 per share, the banking stock has a forward dividend yield of 6.4% and pays investors an annual dividend of 16p per share. The stock, which has no economic moat, is currently trading near its fair value estimate of £3.36 per share, leaving it with a Morningstar Rating of 3 stars.
Barclays
Barclays gained 22.6% in the first quarter and rose 31.1% over the past 12 months. The stock's £1.83 price gives it a forward dividend yield of 4.37%. Barclays pays investors an annual dividend of 8p per share. With a fair value estimate of £2.29 per share and no economic moat, the bank is fairly valued and has a Morningstar Rating of 3 stars.
Just Group
Specialty insurance firm Just Group rose 22.5% in the first quarter and gained 24.6% over the past 12 months. At £1.05 per share, Just Group has a forward dividend yield of 1.98% and an annual dividend of 2p per share. The stock, which has no economic moat, is trading near its quantitative fair value estimate of £1.18 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.
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.
When it comes to buying stocks, it’s more than just dividends. Read here how valuations and competitive advantages – known as economic moats – matter when it comes to a stock’s potential for outperformance.
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.
