Best British dividend shares to buy for March

We asked our writers to share their top dividend picks for March, including two flooring companies with high ceilings!

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Senior woman potting plant in garden at home

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Every month, we ask our freelance writers to share their top ideas for dividend shares to buy with you — here’s what they said for March!

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

Bodycote

What it does: Bodycote specialises in heat treatment and welding, working mainly with the aerospace and automotive sectors.

By Roland Head. FTSE 250 firm Bodycote (LSE: BOY) is the largest player in its sector and has a long history of growth, even during difficult economic conditions.

The shares are trading nearly 40% below the record highs seen in 2018, as the market prices in a potential recession. However, I think that sensible management and healthy finances mean this stock could be a decent dividend buy today.

Bodycote’s payout was maintained in 2008/9 and was only paused in 2020 — not cut. Although the 2023 forecast yield is relatively modest at 3.5%, analyst expect this payout to be covered twice by earnings. That should make it pretty safe.

The risk is that trading could take a turn for the worse if Western markets suffer a more serious recession than expected. However, I think the share price reflects these risks.

I think shares in Bodycote could be a good to buy for dividend investors in March.

Roland Head does not own shares in Bodycote.

Central Asia Metals

What it does: Central Asia Metals is a copper, zinc and lead production and exploration company. 

By Paul Summers: So long as I can stomach the volatility that base metal markets are notorious for, I think shares in Kazakstan and North Macedonia-based miner Central Asia Metals (LSE: CAML) continue to look interesting from a dividend perspective. 

As I type, the AIM-listed mid-cap is down to yield 5.7% in 2023. For comparison, the FTSE 100 yields 3.6% on average. 

Is the larger payout worth the increased risk? Well, the company’s balance sheet looks solid to me. Moreover, dividends are expected to be covered twice by profit this year. So, I think a cut is unlikely. 

Looking further ahead, the very healthy demand for copper over the next decade (thanks to the green energy transition) is also likely to prove a big tailwind for the £500m-cap business.

Full-year numbers for 2022 are due in late March, but I’d be happy to invest now for the long term.

Paul Summers has no position in Central Asia Metals.

Diageo

What it does: Diageo is an alcoholic beverages company that owns a vast range of spirits brands.

By Edward Sheldon, CFA. Diageo (LSE: DGE) shares have experienced a bit of a pullback recently and I think this is a good buying opportunity.

Diageo has a great track record when it comes to rewarding investors with income. Indeed, the alcoholic beverages company has registered more than 20 consecutive dividend increases now. There are not many companies in the UK that can boast that kind of dividend track record!

Looking ahead, I see the potential for further dividend growth. Recently, the company advised that it’s targeting sales growth of 5-7% for the next few years. This level of top-line growth should support higher income payouts.

On the downside, the yield here is not particularly high. Currently, it’s a little over 2%. I’m not put off by the lower yield, however. I think Diageo has the potential to deliver solid total returns (share price gains plus dividends) in the years ahead.

Edward Sheldon owns shares in Diageo.

Ibstock 

What it does: Ibstock sells flooring, roofing and landscaping products but is best known as a major UK brick supplier.

By Royston Wild. Brickmaker Ibstock (LSE:IBST) is a UK income stock I already own in my portfolio. And I’m tempted to increase my stake following robust trading numbers from rival Brickability

Earlier this month it announced “a strong performance across all of [our] business divisions” and hiked its full-year profits forecasts. I think Ibstock could put out robust news of its own when annual results are released on Wednesday, 8 March. Such news could prompt a juicy share price re-rating. 

Ibstock’s share price has certainly underperformed those of its rivals like Brickability and Michelmersh in February. This is despite it enjoying a “resilient performance” in the final quarter of 2022, with solid margins helping to drive adjusted earnings for the full year above expectations. 

This weakness might provide extra scope for a re-evaluation of its share price. Today, Ibstock shares carry a healthy 4.7% dividend yield for 2023. 

Royston Wild owns shares in Ibstock.

James Halstead

What it does: James Halstead is a long-established commercial flooring manufacturer and distributor with markets around the world

By Kevin Godbold. I reckon the fear of cyclicality in the James Halstead (LSE:JHD) business has been driving investor sentiment more than the company’s financial figures. In the ballpark of 205p, the share price has fallen 19% over the past year. But earnings have remained resilient. For example, analysts expect a mere 1% decline in the current trading year to June 2023.

Meanwhile, the dividend record is strong with a small increase in the payment every year since at least 2017 — including through the pandemic years. But the weak share price has pushed up the forward-looking yield. And it now stands at around 3.9% for the trading year to June 2024, which I see as attractive. However, the earnings multiple looks high for that year at almost 21.

But James Halstead sports some decent quality indicators. And, despite the risks, I see the current confluence of circumstances as creating an opportunity for investors.

Kevin Godbold does not own shares in James Halstead.

Legal & General

What it does: Legal & General is a British multinational financial services company that offers mortgages, pensions and similar products.

By John Fieldsend. Legal & General (LSE:LGEN) currently offers its shareholders an excellent 7.3% dividend yield. That’s among the highest payouts on offer on the FTSE 100 and would be an instant buy for me if I was confident it could maintain the dividend going forward. 

The dividend itself is the highest it’s been for several years, although Legal & General do have a history of over 5% dividend yields. In addition, the company typically uses less than 60% of earnings on paying the dividend, in 2021 it was only 54%.

The company itself is trading at a low P/E ratio of only 7.6. And in spite of being a categorical income stock, shareholders have enjoyed share price growth for years. Since 2013, for example, the share price has gone up around 39% without including dividend payouts. All of which points to Legal & General to me being the best investment for an income-focused stock in my portfolio.

John Fieldsend does not own shares in Legal & General.

Moneysupermarket.com

What it does: Moneysupermarket.com operates price comparison sites for insurance, money, home services, and other products.

By Charlie CarmanMoneysupermarket.com (LSE:MONY) might be a rare beneficiary from the cost-of-living crisis. As cash-strapped consumers search for the best deals, I expect the inflationary environment will continue to drive traffic to its websites.

Preliminary results for 2022 were largely encouraging. The company delivered 22% revenue growth to £387.6m and a 33% increase in post-tax profit, which hit £69.3m. In addition, the group slashed its net debt by 38% to £37.2m.

Insurance makes up the lion’s share of the firm’s revenue, but the most exciting developments are in the company’s travel deals. Buoyed by the tourism sector’s post-pandemic recovery, revenue for this segment rocketed by 265% last year to £14.9m.

The company’s home services division continues to struggle, largely due to the government’s energy price guarantee, which has stymied competition in the market.

Nonetheless, with diversified revenue sources and a 5.2% dividend yield, Moneysupermarket.com looks like a reliable income stock to me.

Charlie Carman has no position in Moneysupermarket.com.

Phoenix Group

What it does: Phoenix Group is a UK-based savings and retirement business that includes management of pensions, annuities and insurance products.

By Harshil Patel. Phoenix Group (LSE:PHNX) shares have offered dividend investors limited share-price growth over the past decade. But what it has lacked in share-price appreciation, it has made up in income distribution.

This income stock currently offers a juicy dividend yield of 8%. And dividends have been steadily rising for years. It’s a business that has a long-standing policy to pay sustainable dividends that grow over time.

Another key focus for Phoenix is resilience. It has over 240 years of experience. And across its £270bn of assets under administration, it aims to offer reliability.

There’s a chance that volatile stock markets could put a lid on its investment returns. But I reckon it’s experienced enough to manage through these challenges.

Its latest trading update in December was encouraging. Phoenix said it was on track to deliver 2022 cash generation at the top end of its target range of £1.3bn-£1.4bn.

With full-year results due in on 13 March, I’d look to buy ahead of that.

Harshil Patel does not own shares in Phoenix Group.

Primary Health Properties

What it does: Primary Health properties is a real estate investment trust that owns doctors surgeries and pharmacies. 

By Stephen Wright. My top income stock for March is Primary Health Properties (LSE:PHP). It’s a real estate investment trust (REIT) focused on medical properties.

At today’s properties, the stock has a dividend yield of around 6%. Even with interest rates rising, I think that’s pretty good.

It gets better though – the company has raised its dividend consecutively for the last 26 years. And I think there’s more to come from this particular business.

The company generates around 90% of its revenue from the UK government. That kind of dependency on one source of income might look risky, but I think it’s a positive thing.

Even in a recession, I expect NHS spending to increase steadily. The company’s record of dividend increases seems to support this idea.

The stock hasn’t fared well over the last year as interest rates have been rising. But I see this as an opportunity to invest in a company with a solid business at a reasonable price.

Stephen Wright does not own shares in Primary Health Properties.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

The Motley Fool UK has recommended Bodycote Plc, Diageo Plc, Ibstock Plc, Moneysupermarket.com Group Plc, and Primary Health Properties Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »