When the Dutch East India Company first set course for Asia, the journeys were perilous, costly and far from guaranteed to succeed. Funding those expeditions required deep pockets, and persuading investors to take the risk was often a challenge.
Then came a simple but powerful innovation: reward wealthy merchants for backing the voyages with regular annual payments. So the dividend was born — first handed out in prized spices such as nutmeg and cloves, later in cash — and more than three centuries on, the idea remains a cornerstone of investing.
This year, companies in the FTSE 100 are on course to distribute nearly £89 billion in dividends, according to investment platform AJ Bell — a record total for Britain’s blue-chip stock market index.
Those payments would mark the biggest payouts since 2018, and forecasts suggest they could climb even higher next year as companies across the market continue to return billions of pounds to shareholders.
The scale of the payouts underlines the strength of many UK-listed businesses. Midas has identified seven standout dividend prospects, among them Standard Life, whose shares have risen 40 per cent since they were first recommended.
Standard Life
The retirement market has become a vast industry in its own right. Today, almost £3.5 trillion is invested in products linked to later-life financial planning, ranging from workplace pensions to annuities.
Over the next ten years, that pool of money is expected to expand to more than £6 trillion — and Standard Life is the leading name in the sector.
Midas first tipped the stock in 2022, when the business was still known as Phoenix Group and its shares were trading at £6.61.
Standard Life, formerly known as Phoenix Group, is the biggest name in retirement-related products
They have since soared to £9.23, supplemented by £2.15 of dividend payments, with returns forecast to increase materially from here.
Brokers are looking for a payout of 57p this year, putting the shares on a yield of around 6 per cent. But the firm has been cutting costs, paying down debts and managing its business more effectively.
As a result, chief executive Andy Briggs is likely to find himself with annual excess cash of around £500 million from 2027.
How he plans to use this money will become clearer later this year, but chances are that at least some of it will be diverted towards dividends – turbo-charging payouts for shareholders.
The UK investment market has become notably more competitive, but Standard Life has certain advantages, not least an almost exclusive focus on retirement savings and a 22 per cent share of the fast-expanding workplace pensions sector.
The group also announced the acquisition of rival Aegon UK earlier this year, a deal that should be complete by December and is expected to add customers, fuel growth and increase efficiency. Technological improvements are under way too, which should improve customer service and drive efficiency.
At £9.20, the shares are an attractive, long-term investment.
Traded on: Main market
Ticker: SDLF
Contact: standardlifeplc.com
Investec
Imagine if ringing the bank was a pleasurable experience. Imagine if the phone was answered promptly by a qualified, helpful and efficient professional. For most of us, that is a pipe dream. For customers of Investec, it is par for the course.
Founded in South Africa in 1974, Investec is now a FTSE 100 bank, with operations across the globe, including a substantial presence in the UK. Valued on the stock market at more than £6 billion, the group has ambitions to become considerably larger, paying generous dividends along the way.
Its call centre is just one area where Investec strives to be different. Staffed by graduates and open day and night, the desk reflects an in-built commitment to customer service – and it works.
Investec, which is valued on the stock market at more than £6 billion, is a FTSE 100 bank
Unlike most peers, Investec does not try to be all things to all men. Instead the group specialises in areas such as investment banking, private banking and financial planning, primarily for well-heeled individuals and their businesses.
In recent times, some of these customers have been calling on Investec to offer more. Chief executive Fani Titi has responded, with mainstream banking products, such as credit cards and savings accounts, alongside a continued emphasis on high-quality support from bankers, not bots.
A leading force in South Africa, Investec is well regarded here too, with a growing number of wealthy clients and a thriving investment bank. The group owns 40 per cent of UK wealth manager Rathbones, which has had its problems but should deliver in time.
City analysts are fans of Investec, expecting an increase in profits from £900 million to £1.2 billion over the next three years. This should feed through to sustained dividend growth, with 41.5p forecast for 2027, rising to more than 51p by 2029.
For many of us, news from South Africa seems unremittingly bad. Inside the country, though, change is under way and economic prospects are improving.
Titi is a source of inspiration too. Born to a family of 14 children, he grew up during apartheid and escaped from a life of rural poverty through exceptional intellect and drive. A can-do culture permeates the bank to this day.
At £6.62, the shares are a buy, and a yield of more than 6 per cent is an added bonus.
Traded on: Main market
Ticker: INVP
Contact: investec.com
LondonMetric
When LondonMetric boss Andrew Jones co-founded the business, his ambition was clear: to create a dividend aristocrat – a company that delivers annual dividend growth for at least 25 years.
He is well on the way. LondonMetric was formed in 2012, paid its first dividend in 2013 and has increased payments ever since, with another increase likely this year. The record is impressive. As a property company, LondonMetric is exposed to the ups and downs that pervade the sector, but Jones has a razor-sharp focus on income – buying assets that will generate decent and growing rents in sectors that are likely to be long-term winners.
LondonMetric aims to grow its annual dividends each year for at least 25 years
Warehouses and distribution hubs account for over half the portfolio, convenience stores feature strongly, as do budget hotels and theme parks such as Alton Towers and Thorpe Park that play to consumers’ increasing interest in experiences and entertainment.
LondonMetric has grown by canny acquisitions too, including the joint purchase of smaller firm Picton Property, unveiled just last month. Deals are all engineered to increase income and drive down costs, so today Jones sits on an £8 billion portfolio generating £430 million of rent and managed by just 54 people.
Costs are also held down because LondonMetric is managed on a so-called ‘triple-net’ basis, meaning tenants are responsible for maintaining their properties, insuring them and paying associated taxes.
Exceptionally low overheads allow Jones to be generous to shareholders, who receive quarterly dividends, because rents are collected on a quarterly basis too.
This year, analysts expect a full-year payout of 12.5p, rising to 12.9p next year and more than 14p by 2030. With LondonMetric shares at £1.98, that puts the stock on a yield of 6.3 per cent.
In common with many property stocks, LondonMetric shares have had a rough ride over the past five years. But better times should lie ahead, as LondonMetric has top credentials. Occupancy rates are at 98 per cent, rents are rising and Jones is determined to take the dividend higher and higher.
The stock is a buy.
Traded on: Main market
Ticker: LMP
Contact: londonmetric.com
Landsec
If LondonMetric is a young blood of the property world, Landsec is more of a doyen.
Founded in 1944 to rebuild bombed-out Britain, the company today boasts a portfolio of assets collectively valued at almost £11 billion. These generate annual rents of more than £550 million, expected to rise materially between now and 2030, providing solid fuel for dividend growth.
Landsec was founded in 1944 and now has assets collectively valued at almost £11 billion
Chief executive Mark Allan is confident he will deliver that growth because he has made a concerted effort to move Landsec with the times, shifting away from property development towards assets that deliver robust and rising income, principally prime central London offices and top-tier shopping centres from Bluewater in Kent to Buchanan Galleries in Glasgow.
Demand in both categories is high. Occupancy is running at 98 per cent and rents are rising at rates last seen two decades ago.
This is no coincidence. As one of the largest firms in its field, Landsec has access to reams of data on the nation’s shopping habits and working practices.
These show that around 30 per cent of physical retail sales are concentrated in just 1 per cent of locations nationwide, primarily big malls – Landsec’s sweet spot.
As a result, the group’s retail customers have seen sales rising by 22 per cent over the past four years, against a market average of just 3 per cent.
Office space is another area where location is everything. In the post-pandemic era, businesses are seeking out top-notch sites, with good transport links and decent refreshment facilities nearby. Landsec specialises in just such offices, so rents are high and rising. Allan renews or renegotiates around a fifth of all his leases every year and rents are climbing by 15 per cent on average, up from 8 per cent just two years ago.
These are challenging times for businesses in search of cheap property but good news for investors in search of income.
Landsec’s dividend is forecast at more than 42.5p in the year to next March, rising to at least 44p in 2028. That puts the shares on a yield of 5.8 per cent. At £7.25, there should be further to go and the dividend adds real comfort.
Traded on: Main market
Ticker: LAND
Contact: landsec.com
Imperial Brands
Smoking is bad for your health, bad for your wallet and deeply uncool in some circles.
But more than a billion people worldwide light up every day, often numerous times.
There are around 30 million smokers in the US, about one in three Eastern Europeans are keen and the habit still attracts a certain cachet in France and Spain.
Imperial Brands is the company behind rolling papers such as Winston and Golden Virginia
Unwelcome news for doctors; less so for Imperial Brands, the company behind names such as Winston, Gauloises, Golden Virginia and Rizla papers.
Spun out of the conglomerate Hanson in 1996, Imperial raised its dividend virtually every year until Covid, and resumed growth thereafter. The stock now yields more than 6 per cent and chief executive Lukas Paravicini is keen to keep going.
That means being disciplined about where Imperial invests its money and how.
Cigarettes are a cash cow, generating more than 90 per cent of annual sales, but growth is coming from so-called next-generation products, such as Blu vapes, Pulze heated tobacco sticks, Zone nicotine pouches and Black Buffalo alternative chewing tobacco.
Some investors refuse to go near tobacco stocks on ethical grounds. Nonetheless, Imperial shares have soared almost 80 per cent to £27.33 over the past five years and brokers believe there is further to go. Rising dividends and undervalued shares are an alluring combination. That makes Imperial an attractive investment for the hard-headed stock-picker.
Traded on: Main market
Ticker: IMB
Contact: imperialbrandsplc.com
Primary Health Properties
Primary Health Properties is a member of the FTSE 250 index rather than the FTSE 100, but it is a dividend aristocrat.
Having joined the stock market in 1996, the company has increased its dividend every year since and should continue in that vein. The group specialises in modern, purpose-built healthcare sites, including more than 1,000 GP surgeries and medical centres in the UK and Ireland, alongside a small number of private hospitals.
Primary Health Properties has increased its dividends every year since 1996
Occupancy is running at 99 per cent, annual rents are approaching £350 million and more than three-quarters of the rent roll is Government backed – a source of great reassurance for investors.
Midas first recommended PHP in 2008, when the shares were 70p. The group has expanded by leaps and bounds since then, bolstered by substantial acquisitions, including the takeover of rival Assura last year.
Today the shares are 96p, so they have rewarded patient investors, who have also benefited from 97p of dividends in the past 18 years. Brokers expect a payout of 7.3p this year, putting PHP on a yield of 7.6 per cent, with 7.5p pencilled in for 2027 and 7.8p the year after.
Rising dividends reflect consistent growth in rental income and management confidence in the future. Nonetheless, PHP has suffered on the stock market lately, amid concerns about the impact of rising interest rates, with the Assura deal taking borrowings to almost £4 billion.
Chief executive Mark Davies is determined to allay these worries, cutting costs, refinancing debts and setting up partnerships with deep-pocketed institutions to bring borrowings and interest charges down. He is well ahead of schedule, with moves that should bolster the private hospital side of the business and fuel continued investment in the state-funded primary healthcare facilities.
These are a far cry from old-fashioned GP surgeries in converted homes. Modern sites offer physiotherapy, podiatry and minor operations – all part of the Government’s plan to reduce the burden on general hospitals.
Primary Health shares have been hit hard in recent years but they should move higher from here. The company is neatly placed to benefit from an ageing population and Government priorities on healthcare in the community. At 96p, the shares are a firm buy, underpinned by that aristocratic dividend record.
Traded on: Main market
Ticker: PHP
Contact: phpgroup.co.uk
James Halstead
Floor specialist James Halstead is on the junior Aim market but the business is a dividend king – an elusive status reserved for firms that have delivered 50 years of uninterrupted dividend growth.
Founded by James Halstead in 1915, the company is still backed by the family and chaired by James’s descendant, Mark.
James Halstead is a dividend king – which means it has delivered 50 years of uninterrupted dividend growth
But there is nothing fusty about this business, which invented vinyl flooring in the 1940s and has been at the forefront of innovation ever since. From factories in Manchester and Teesside, Halstead exports its flooring to 180 countries, including health centres in Ukraine, army bases in Poland, data centres in America and operating theatres in Dubai.
Floors range from fancy collections for luxury homes to specialised flooring for the Scott Base in Antarctica, as well as static-free vinyl for nuclear power stations. The majority though, is used as a cheap, reliable and resilient cover for offices, schools, hospitals, bars and restaurants, shops, factories, even prisons.
The company is a market leader, but progress has been undermined by tricky economic conditions, and a trading statement last month warned that figures would be lower this year than last. Brokers expect a 12.5 per cent decline in profits to £48 million but have still pencilled in an increase in the dividend to at least 9p.
Investors have not been kind to James Halstead and its shares have slumped from £3.25 to £1.23 in the past four years. That seems unjust and should be reversed.
With the stock on a yield of 7.3 per cent, the shares are a buy.
Traded on: Aim
Ticker: JHD
Contact: jameshalstead.com
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