U.K. Dividend Champions List: 2023 Rankings by Yield
In this piece, we will take a look at U.K. dividend champions ranked by dividend yield. For more stocks, head on over to Top 5 U.K. Dividend Champions Ranked by Yield.
The world economy is still recovering from two massive shocks in just five years. According to estimates from the United Nations, between mid 2020 and mid 2022, the global economy was expected to lose an eye popping $8.5 trillion due to the direct impact of the coronavirus pandemic, with 34 million people pushed into poverty in 2020 alone. Adding to this, before the Russian invasion of Ukraine, the World Bank had estimated that global GDP growth would slow down to 4.1% in 2022 after it grew by 5.5% in 2021.
Then, sentiment further soured as the Russian invasion started. Estimates by the World Bank released in October - when the invasion-fueled inflation was at a record high in Europe - showed that economic activity would have a "minimal growth" of 0.3% in 2023 for economies in Europe and Central Asia. At the same time, economic output was expected to slow down by 0.2% in 2022. These changes are due to the high energy prices which create inflationary pressures. These end up depressing the consumer's purchasing power and lead to lower purchases and by extension lower revenue for firms. At the same time, soaring inflation also increases the cost of doing business - further exacerbated by high interest rates - forcing firms to either cut output to maintain margins or reduce profits paid to investors. To complete the devastating cycle, lower investor profits end up sapping their confidence and inducing the flow of money away from the stock market into other money vehicles.
According to data from the Organization of Economic Corporation and Development (OECD), global economic output as a whole would see growth decline to 2.2% this year. Calling the impact of the Ukraine invasion as the "largest energy crisis since the 1970s," the OECD adds that the estimated global GDP spent on energy would roar to 17.7% due to the energy crisis.
Speaking of Europe, the U.K. was one of the hardest hit regions particularly due to the energy crisis. Inflation soared in Britain to a multi-decade high in October 2022 when it stood at 11.1%. At the same time, it started to take a downward trend since then until January 2023 when it dropped by a percentage point by 1%. However, data for February surprised economists as it jumped to 10.4% in the month. This inflation was contributed to a large extent by the restaurant and hotels industry which jumped to 9.2% in February. However, on the positive side, inflation for motor fuels sat at 4.6% in February 2023 as it continued a downward trend from the July 2023 peak of a whopping 43.7%. Broadly speaking, food, non-alcoholic beverages, clothing, and hotels were the biggest contributors to inflation in January and February 2023.
Looking at the future, the Bank of England is quite optimistic about the British economy. A fresh report from the BOE in March 2023 shared that it does not see a recession in the U.K. later this year, toning down its doom and gloom calls from last year when it had warned that the country could see its worst economic contraction in 100 years. However, BOE Governor Andrew Bailey shared in an interview with BBC in March 2023:
We've seen signs of inflation really peaking now, but of course it's far too high. Now we think it's gonna come down sharply, really from the early summer onwards, but we haven't seen that happen yet. We have these this week, which was unfortunately going a bit the other way, we think there's probably some one off elements of that. But we need to see it starting to come down progressively and get back to target - so that's what we need to see.
. . . There are signs of coming down, and of course that's encouraging. We've seen this week, noted today, some signs of wage increases in the private sector are beginning to even off and come down. So that's, I would say a good sign in terms of inflationary pressures on the economy. We've seen quite a sharp further reduction in energy prices since we last made our last decision, that's also encouraging. But we need to see this trend slighted now, it's the big fall in inflation. And of course we know that's what we need to see for all the people in this country whom inflation is hurting.
With these details in mind, let's take a look at some top U.K. dividend champion stocks right now, with the top picks being TR Property Investment Trust plc (LON:TRY.L), Chesnara plc (LON:CSN.L), and Castings P.L.C. (LON:CGS.L).
Photo by Karolina Grabowska: https://www.pexels.com/photo/hands-holding-us-dollar-bills-4968630/
Our Methodology
To compile our list of the top U.K. dividend champion stocks, we used the S&P500's definition of a dividend aristocrat which lists down firms with at least seven years of dividend growth. Then, we listed down all such stocks and eliminated those that are the S&P's dividend aristocrats to avoid any overlaps with our recently published list on UK dividend aristocrats. The firms were then ranked according to dividend yield, and the top dividend champions in the U.K. are listed below.
U.K. Dividend Champions List: 2023 Rankings by Yield
25. Spectris plc (LON:SXS.L)
Latest Dividend Yield: 1.97%
Spectris plc (LON:SXS.L) is a technology company headquartered in London. It makes and sells precision instruments such as those used in chip fabrication, industrial production, electronics, and mining.
24. The Brunner Investment Trust PLC (LON:BUT.L)
Latest Dividend Yield: 1.99%
The Brunner Investment Trust PLC (LON:BUT.L) is a mutual fund domiciled in London. It is managed by Alliance Global Investors, and invests primarily in growth stocks.
23. The Bankers Investment Trust PLC (LON:BNKR.L)
Latest Dividend Yield: 2.34%
The Bankers Investment Trust PLC (LON:BNKR.L) is one of the oldest mutual funds out there since it was first set up in 1888. It invests in large and mid cap companies all over the world.
22. Alliance Trust PLC (LON:ATST.L)
Latest Dividend Yield: 2.41%
Alliance Trust PLC (LON:ATST.L) is an investment management firm that operates out of London. It was set up in 1888 and invests in public markets.
21. Witan Investment Trust plc (LON:WTAN.L)
Latest Dividend Yield: 2.57%
Witan Investment Trust plc (LON:WTAN.L) is a mutual fund domiciled in London. It is managed by a variety of different firms and invests in dividend paying and value companies.
20. The Scottish American Investment Company P.L.C. (LON:SAIN.L)
Latest Dividend Yield: 2.58%
The Scottish American Investment Company P.L.C. (LON:SAIN.L) is a mutual fund set up in 1873 and domiciled in London.
19. CRH plc (LON:CRH.L)
Latest Dividend Yield: 2.66%
CRH plc (LON:CRH.L) is a building materials firm that is based in Dublin, Ireland. It sells a variety of products such as drain pipes, concrete masonry, and utility enclosures.
18. NWF Group plc (LON:NWF.L)
Latest Dividend Yield: 2.86%
NWF Group plc (LON:NWF.L) is a rare British oil company that is headquartered in Nantwich. It sells domestic, heating, and other fuels. The firm also has a presence in the grocery market.
17. The Henderson Smaller Companies Investment Trust plc (LON:HSL.L)
Latest Dividend Yield: 2.95%
The Henderson Smaller Companies Investment Trust plc (LON:HSL.L) is a mutual fund domiciled in London and set up in 1887.
16. Clarkson PLC (LON:CKN.L)
Latest Dividend Yield: 2.98%
Clarkson PLC (LON:CKN.L) is a marine shipping company based in London. It is a diversified firm with services ranging from shipping to providing customer financial support.
15. Aberforth Smaller Companies Trust Plc (LON:ASL.L)
Latest Dividend Yield: 3.16%
Aberforth Smaller Companies Trust Plc (LON:ASL.L) is a mutual fund domiciled in Edinburgh. It invests in small cap companies.
14. CT UK Capital And Income Investment Trust Plc (LON:CTUK.L)
Latest Dividend Yield: 3.93%
CT UK Capital And Income Investment Trust Plc (LON:CTUK.L) is a mutual fund that invests in value stocks with strong balance sheets.
13. RWS Holdings plc (LON:RWS.L)
Latest Dividend Yield: 4.01%
RWS Holdings plc (LON:RWS.L) is a business services provider headquartered in Chalfont St Peter. It helps firms file and manage their patents.
12. Murray International Trust PLC (LON:MYI.L)
Latest Dividend Yield: 4.1%
Murray International Trust PLC (LON:MYI.L) is a mutual fund domiciled in Aberdeen.
11. Murray Income Trust PLC (LON:MUT.L)
Latest Dividend Yield: 4.1%
Murray Income Trust PLC (LON:MUT.L) is an Aberdeen-based mutual fund that invests in dividend paying growth stocks.
10. Rathbones Group Plc (LON:RAT.L)
Latest Dividend Yield: 4.22%
Rathbones Group Plc (LON:RAT.L) is one of the oldest companies on our list since it was set up in 1742. It is a financial services firm headquartered in London.
9. Schroder Income Growth Fund plc (LON:SCF.L)
Latest Dividend Yield: 4.29%
Schroder Income Growth Fund plc (LON:SCF.L) is a mutual fund domiciled in London. It invests in public equity markets.
8. The City of London Investment Trust plc (LON:CTY.L)
Latest Dividend Yield: 4.72%
The City of London Investment Trust plc (LON:CTY.L) is a main market fund with ￡2 billion in market capitalization.
7. JPMorgan Claverhouse Investment Trust plc (LON:JCH.L)
Latest Dividend Yield: 4.73%
JPMorgan Claverhouse Investment Trust plc (LON:JCH.L) is a mutual fund domiciled in London. It invests in large cap British firms.
6. The Merchants Trust Plc (LON:MRCH.L)
Latest Dividend Yield: 4.75%
The Merchants Trust Plc (LON:MRCH.L) is a mutual fund based in London. It is managed by Alliance Global Investors.
TR Property Investment Trust plc (LON:TRY.L), The Merchants Trust Plc (LON:MRCH.L), Chesnara plc (LON:CSN.L), and Castings P.L.C. (LON:CGS.L) are some top U.K. dividend champions.
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Disclosure: None. U.K. Dividend Champions List: 2023 Rankings by Yield is originally published on Insider Monkey.