Best UK Dividend Stocks: 4 FTSE 100 Shares To Buy Today

Last Updated August 12th 2021
5 Min Read

Dividend-paying stocks are among the best to invest in at the London Stock Exchange. However, it is vital to do some background research even when looking to invest in dividend-paying stocks.  

This article dwells on four FTSE 100 top dividend stocks in the UK. All of them have good dividend yields, a track record of paying dividends, and a high potential for capital appreciation.

Best UK Dividend Shares: 4 FTSE 100 Stocks To Buy Today

  1. Imperial Brands (IMB)
  2. M&G (MNG)
  3. Legal & General (LGEN)
  4. GlaxoSmithKline (GSK)

1. Imperial Brands (IMB)

A dividend stock with an 8% yield

Tobacco company Imperial is one of the best UK dividend-paying stocks, averaging 8.79%.

Besides the attractive dividend yield in 2021, the company has been increasing its dividend yield over the last couple of years.

In 2015, it gave out a dividend of GBP 141 per share. This went up to GBP 155.20 in 2016, GBP 170.72 in 2017, GBP 187.79 in 2018, and GBP 206.57 in 2019.

Besides giving investors a consistently high dividend, this stock also has good prospects for value appreciation.

One of the key factors pointing to its potential for value appreciation is insider buying. Insiders usually have a better understanding of a company than anyone else involved in it. As such, when they buy, it is usually a pointer of good things to come.

Imperial has experienced insider buying over the last 12-months.  In this period, one of their directors, Oliver Tant, bought GBP 159,000 of the stock. That’s an indicator that the director expects this company to perform well going into the future.

However, it is not just insider buying that gives Imperial good prospects for growth going forward.

The books are pretty impressive too. Cash flows are quite high, standing at GBP 3.74 billion.

It’s an indicator that the company has the money to sustain its operations going into the future. High cash flows are usually a good feature to look for when analyzing the sustainability of a company.

For a company that operates in a highly regulated industry, the company has a healthy revenue growth rate. Its quarterly revenue growth rate stands at 4.80%. 

Imperial also offers one of the best returns on equity of any company in the LSE, standing at 57.50%.

Besides its solid fundamentals, the charts point to the potential for value appreciation in the short to medium term.

It has consistently traded above the 100-day moving average support for more than three months. Buying momentum has shot up in August, and its price recently pushed through the 50-day moving average resistance, with high volumes.

This only points to a higher potential for gains, especially now that the economy is opening up again.

The company’s low PE of 19.7 is also a good indicator of it being undervalued, hence the increased buying momentum.

2. M&G (MNG)

Capital appreciation

M&G is another FTSE 100 share that makes for a top UK dividend-paying stock.

As per the last payout, the company has a relatively high dividend yield, standing at 8%.

Besides the high dividend yield, the fundamentals point to M&G as a growth stock. That’s largely due to the nature of the company’s services.

M&G is an investment manager, and its core business is investing in equities, fixed income securities, and real estate in the UK and beyond.

Having been in operation successfully for over eight decades, it is clear that the firm has the right people to manage its assets. This is a good assurance of long-term value appreciation.

Secondly, the current situation in the markets at the moment points to the potential for growth.

For the better part of 2021, real estate prices have been booming. This means the company’s holdings in this sector have been appreciating for the better part of the year.

Stock prices are gaining upside momentum now that the economy is opening up again after the disruptions of 2020. Ideally, this means M&G’s stock holdings are likely to grow in value going forward.

All these factors will most likely contribute to its value appreciation going forward. When coupled with its high dividend yield, there is no doubt that’s it’s a stock with high prospects for value growth.

From the charts, M&G is at an interesting price level at the moment. It has been in a correction for the better part of August and is now trading at the 100-day moving average support. 

If it bounces off this support, the room for upside growth is quite huge, especially when the improving market dynamics are put into consideration.

3. Legal & General (LGEN)

Financial services are on a rebound.

Legal & General is another top performer when it comes to UK dividend-paying shares.

LGEN’s dividend yield is currently at 6.72% and has been going up for a couple of years now.  

In 2015, its dividend was at GBP 13.4 per share, and by 2019, the figure had risen to GBP 17.57 per share.

Aside from the high dividend yield, the company has some good fundamentals to it too. One of the potential upsides to this company is that it is heavily invested in UK real estate.

According to CEO Nigel Wilson, Legal & General has invested more than GBP 30 billion in the past 8-years. Most of that money is invested in regional cities, recording a quicker return to normal than London.

The economic rebound is likely to positively impact the financial services industry, further adding to the positive indicators for this stock.

The charts also give this stock a high potential for growth going forward. It has been on a rebound since July, and in the first week of August, it crossed the 100-day moving average resistance with high volumes.

This points to a potential growth stock that also doubles up as a consistent dividend payer.

4. GlaxoSmithKline (GSK)

A pharma mainstay

GlaxoSmithKline is one of the largest pharmaceutical companies in the world. It’s not surprising that it stands out as a top dividend stock to buy now.

GSK has a dividend yield of 5.56% and has maintained the same for 5-years in a row.

The high dividend payout comes from GSK being one of the most financially stable companies, not just in the UK, but globally.

GSK also has a pretty healthy revenue growth rate for a mature company, standing at 6.10% quarterly (year-over-year). It also makes a good profit margin from its revenues.

From its last reporting, it had a profit margin of 13.34% and an operating margin of 24.85%.

Cash flows are among the best metrics to judge a company’s health, and GSK is doing well on this front. The company has operating cash flows of GBP 6.34 billion.

The only risk to GSK at the moment is its low current ratio of 0.82. This means the company may not be in a position to cover all its short-term liabilities if called to do so.

However, for a company that is heavily involved in research, a breakthrough on any one of them would easily offset this concern.

Besides, it’s an international brand, and with interest rates still low, it can borrow comfortably without putting a strain on its resources.

This may explain why the majority of the analysts who have reviewed this company either have a buy or strong buy rating for it.

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