As the UK market grapples with global economic challenges, particularly the sluggish recovery in China which is affecting commodity prices and export figures, investors are increasingly looking to stable sources of income such as dividend stocks. In such uncertain times, a good dividend stock is characterized by its ability to offer consistent payouts and financial resilience in fluctuating market conditions.

Click here to see the full list of 62 stocks from our Top UK Dividend Stock Screener.

Let’s take a closer look at a couple of our picks from the reviewed companies.

Simply Wall St Dividend Rating: ★★★★☆☆

Overview: Vertu Motors plc is a UK car retailer with a market cap of £221.91 million.

Operations: Vertu Motors plc generates revenues of £4.79 billion from its operations in the UK petrol and car retail sector.

Dividend: 3.6%

Vertu Motors offers a mixed dividend profile with recent growth in payouts over the past decade, although they have been volatile. The company’s payout ratios are sustainable, with earnings and cash flows comfortably covering dividends at 41.8% and 17.8%, respectively. However, its dividend yield of 3.58% is lower than the best UK payers. The recent share buybacks reflect strategic capital allocation but coincide with declining profits and net income from last year, which could affect future dividends.

Simply Wall St Dividend Rating: ★★★★☆☆

Overview: Capital Limited, together with its subsidiaries, provides a range of drilling solutions to the minerals industry and has a market capitalization of £164.86m.

Operations: Capital Limited generates revenue primarily through its Business Services segment, amounting to USD 333.59 million.

Dividend: 3.5%

Capital Limited’s dividend profile shows sustainable payout ratios, with earnings and cash flows covering dividends of 26.1% and 24%, respectively. Despite a declared interim dividend of $0.013 per share for 2023, the company’s dividend history has been marked by volatility over the past decade. The latest financials show increased sales to $169.43 million but a decline in net profit to $9.21 million for the first half of 2024, potentially impacting future payouts amid ongoing board changes and strategic adjustments.

The story continues

Simply Wall St Dividend Rating: ★★★★☆☆

Overview: Foresight Environmental Infrastructure, which operates under John Laing Environmental Assets Group Limited and is managed by John Laing Capital Management Limited, has a market capitalization of £557.71M.

Operations: Foresight Environmental Infrastructure’s revenue segment includes an environmental infrastructure investment of -£3.83m.

Dividend: 8.8%

Foresight Environmental Infrastructure’s dividend yield is in the top 25% in the UK, but its sustainability is questionable due to a lack of free cash flow and profitability. Despite stable and growing dividends over the past decade, payouts are not covered by earnings or cash flows. The company is trading at almost 10% below estimated fair value. New £20m share buyback plans could affect future dividend options amid financial constraints.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only by using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any shares and does not take into account your goals or your financial situation. We strive to provide you with long-term focused analysis driven by fundamental data. Note that our analysis may not take into account recent price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include AIM:VTU LSE:CAPD and LSE:FGEN.

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