When investing for income, it can pay to look beyond well-known dividend stocks such as BP, Tesco, and GSK. There’s nothing wrong with investing in these kinds of ‘blue-chip’ companies, of course. However, taking a more adventurous approach to stock picking can potentially generate higher levels of income while simultaneously increasing portfolio diversification. With that in mind, here are five under-the-radar UK stocks that paid huge dividends last year.
M&G
First up is savings and investment company M&G (LON:MNG), which was spun off from insurance giant Prudential a few years back.
In 2023, M&G paid out a final dividend of 13.4p per share in April and then an interim dividend of 6.5p per share in November, meaning the total income paid was 19.9p per share. That’s a lot of cash for shareholders. At today’s share price, that equates to a trailing yield of around 9%.
Now often, when a company has a yield of this magnitude, it’s a red flag. However, looking under the bonnet here, there doesn’t seem to be any major problems (the company reported a 31% rise in H1 operating profit in September).
So, this company could potentially be a cash cow for investors in the years ahead.
- Related guide: How to invest in UK dividend stocks
Close Brothers
Sticking with the Financial sector, another company that paid out tons of cash to shareholders last year was Close Brothers (LON:CBG), which offers banking, wealth management, and securities trading services.
It paid out an interim dividend of 22.5p per share in April followed by a final dividend of 45.0p per share in November. Add together these two payouts, and you have a yield of around 8.6% at today’s share price.
Close Brothers’ securities trading division (Winterflood) has underperformed lately. This is understandable as there has been a relatively low appetite for investing.
However, other areas of the business, such as banking and wealth management, have been performing relatively well. This leads me to believe the stock is worth a closer look right now.
DS Smith
Turning to the Industrial sector, one company here that paid out a lot of income in 2023 was DS Smith (LON:SMDS). It’s a leading provider of sustainable packaging solutions.
It paid an interim dividend of 6.0p per share in January, followed by a final dividend of 12.0p per share in October, meaning its total payout for the year was 18.0p per share. At today’s share price, that translates to a yield of just under 6%.
Packing is a cyclical industry. However, taking a long-term view, there’s a compelling growth story here. Not only does DS Smith look set to benefit from the continued growth of e-commerce (it’s a major supplier to Amazon), but it should also benefit from the increasing focus on sustainability.
Add in the fact that the company has a low valuation right now, and there’s a lot to like about the stock.
- Related guide: Where to invest money to get monthly income in the UK
Renewables Infrastructure Group
Speaking of sustainability, check out Renewable Infrastructure Group (LON:TRIG), or ‘TRIG’ for short. It’s a FTSE 250 investment company that owns a portfolio of renewable energy assets.
TRIG has been a reliable dividend payer in recent years and in 2023 it paid out four dividends, for a total of 7.11p per share. At today’s share price, that equates to a yield of about 6.4%.
Given the global shift to renewable energy, TRIG looks well placed going forward. With a portfolio of onshore/offshore wind farms, solar parks, and battery storage projects across the UK and Europe, it’s in the right place at the right time.
It’s worth noting that over the next 10 years, more than 50% of the company’s revenues will be linked to inflation.
Primary Health Properties
Finally, we have Primary Health Properties (LON:PHP). It’s a real estate investment trust (REIT) that focuses on healthcare facilities.
In 2023, Primary Health Properties paid its investors eight dividends. In total, the income came to 6.72p per share, which at today’s share price equates to a yield of around 6.4%.
One thing PHP has going for it is that a large proportion of its rental income is backed by the UK government. This means that its income is unlikely to suddenly fall off a cliff.
Another positive is that the company operates in an industry with attractive long-term fundamentals. In the long run, the UK’s ageing population should increase demand for healthcare services.
Given that the stock is currently well off its highs, it could be worth a look right now.
It’s worth pointing out that all these dividend stocks have their own risks. Dividends are never guaranteed. However, as part of a diversified portfolio, they could be solid options in 2024.
Based in London, Edward is a distinguished investment writer with an extensive client portfolio comprising a diverse array of prominent financial services firms across the globe. With over 15 years of hands-on experience in private wealth management and institutional asset management, both in the UK and Australia, he possesses a profound understanding of the finance industry.
Before establishing himself as a writer, Edward earned a Commerce degree from the prestigious University of Melbourne. Complementing his academic background, he holds the esteemed Investment Management Certificate (IMC) and is a proud holder of the Chartered Financial Analyst (CFA) qualification.
Widely recognized as a sought-after investment expert, Edward’s insightful perspectives and analyses have been featured on sites such as BlackRock, Credit Suisse, WisdomTree, Motley Fool, eToro, and CMC Markets, among others.
