5 of the Best UK Dividend Stocks to Buy in September

Last Updated August 30th 2021
5 Min Read

Don't buy UK stocks just because you think the share prices will rise in the short term. The very best stocks to buy are those that are able to provide big returns over the long term. 

With the global pandemic changing course but still showing no signs of abating just yet, investors are turning on the hunt again for high dividend-yielding stocks. Which UK dividend stocks should investors be thinking about buying this September 2021?

Dividend stocks can appear boring when compared to the dynamism of growth stocks, but regular dividend payments are something long term investors value highly.  Chasing short term rises in share prices entails a great deal of risk, and the steady income provided through dividend payments can look very attractive by comparison.

Here we take you through 5 of the top UK dividend stocks and why these stocks could be a ‘buy’ this September.

Top 5 Best UK Dividend Stocks to Buy in September 2021

Stock experts thing that the following UK shares could be some of the best long-term stocks to buy today.

1. M&G

Since going public in 2019, wealth management specialist M&G has gone from strength to strength. In contrast to the cyclically variable revenues which condemned financial sector stocks to stagnation or sharp decline over 2020 and into 2021, the wealth management sector enjoys relatively stable revenues. 

This is because the fees for advisory services and asset management charges are constant and don’t tend to fluctuate much. This means that the volatility that can make or break successive quarters for banks are far less damaging for firms like M&G. 

Indeed, M&G succeeded in meeting their expected dividend payment of 12.23p, and this equates to a yield of around 7.97%.  This amount was in line with the M&G’s official policy of a stable increasing dividend, and means M&G remains a tempting proposition for investors hunting for yield right now.

2. Imperial Brands

Despite receiving the adverse news that the Biden administration is considering capping the nicotine content of cigarettes, it has been something of a bumper year for FTSE-listed tobacco manufacturer, Imperial Brands. 

2020 saw a gigantic 24% rise in operating profits, with the rolling series of global lockdowns leaving smoking as one of precious few leisure activities available throughout the year. 

As a well-established group with relatively stable earnings over the long term, Imperial Brands has long been one of the UK market’s dividend aristocrats. The shares currently yield a meaty 9.03%, and even the prospect of further regulation seems unlikely to fundamentally dent the century old and truly global business model.

3. Aviva

With a current P/E ratio of 9.45, insurance giant Aviva looks like an extremely interesting prospect in terms of value for money alone. 

However, it is the stocks’ consistently strong dividend performance which really make it stand out from the crowd.  With a current yield of 5.17%, and a solid and well-articulated plan from new CEO Amanda Blanc to refocus the sprawling firm on its core English-speaking markets, Aviva looks well positioned to gain greater market share as the UK economy gradually normalises. 

Crucially, unlike rival UK insurer Hiscox, Aviva managed to avoid the negative press coverage that ensued with the first lockdown and conflicts over small business interruption insurance pay-outs.  This should aid the household name in terms of competing for more of the potentially lucrative small business insurance market.

4. HSBC

A slightly controversial pick, UK banking behemoth HSBC has fought its way back into investors hearts over the past couple of months. 

This is due to stronger than anticipated earnings growth in the first quarter and an expectation that HSBC will eventually be able to deliver the ambitious cost-savings proposed prior to the pandemic. 

Whilst the decision to reinstate dividend payments has been officially put off until August, the general sentiment among HSBC watchers is now that the bank is extremely keen to get back to paying dividends and can be expected to do so soon. 

HSBC has pledged to cut up to 35,000 jobs, and has shrunk the investment banking divisions’ bonus pool by 20%. Both measures taken together leave little doubt as to the seriousness with which cost-cutting is approached by HSBC. More cost-cutting should mean more dividends from an investors point of view.

5. GSK

Finally, GSK is worthy of a look based on the company’s historically strong dividend performance, which has been maintained at the same level for the past 5 years. 

The company received a general vote of confidence after activist hedge fund Elliot Management took a multibillion-pound stake over the last 12 months. 

With an expected dividend yield of 5.42%, GSK still look as though they are capable of straddling the divide between paying out too much in dividends – and therefore choking off the R and D essential to their continued success – and on the other hand slashing dividends too deep in the name of funding new drug development. 

With a much-publicised ‘cost clampdown’ led by CEO Emma Walmsley on the way too, investors are increasingly confident that GSK is on the right track to maintain respectable dividend pay-outs over the medium term at least.

Summary

The lingering uncertainty due to Covid makes it hard to predict market events or even just forecast macroeconomic indicators accurately anything more than weeks in advance.  This makes growth stocks with their high P/E ratios and low dividends even riskier.

Luckily for UK-based investors, the FTSE 100 abounds in high dividend-yielding stocks, many with fantastic track-recording of maintaining and even increasing dividend pay-outs over the years.

With a 2020 average dividend yield of 3.77%, investors looking for UK stocks to buy this September can find numerous options where high dividend yields can be expected. UK shares with good dividends like those above can be expected to rise in popularity as investors search for yield and performance this September.

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