1 top dividend stock to consider buying in November 2023

This cash-generating business has a great dividend record with further increases forecast and a beaten-down stock price.

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There are some tempting UK dividend stocks around. The long bear market has pummelled many company valuations, but lots of businesses are trading well despite their fallen share prices.

For me, it’s time to hunt for bargains. And my watchlist has several stocks worth further and deeper research.

For example, digital wealth management company Hargreaves Lansdown (LSE: HL) is no longer seen by the market as a growth company. And the stock has fallen a long way since peaking in 2019.

The upside to that plunge is the cracking dividend. With the shares near 711p, the forward-looking yield is almost 6.8% for the trading year to June 2025.

An impressive dividend record

But what I like most about the business is its multi-year record of annual rises in the shareholder payment. Since at least 2018, the directors have pushed the dividend higher every year – including through the pandemic.

City analysts expect more of the same ahead with a 10% uplift in the current trading year and a further mid-single-digit uptick the year after.

Could the business be entering a period of contraction? After all, most good things eventually end. It may be. The industry for serving investors is a crowded space these days. Perhaps the stock market is worried about the possibility of shrinking profits in the years ahead.

City analysts predict flat-looking earnings ahead for the next couple of years. And that seems to confirm that Hargreaves Lansdown has gone ex-growth. So there’s some risk in this situation for shareholders.

But it’s still a cash cow. And there’s no sign of that all-important dividend being cut – at least for the next couple of years or so.

Changing client behaviour

The company released a reassuring trading update in October. Chief executive Dan Olley said the business is still seeing “net client growth and positive net new business”.  And that’s despite a challenging macroeconomic backdrop and its “ongoing impact on investor confidence and client behaviour”.

Olley explained that the firm’s customers have been investing more in cash than risk-based assets, such as shares and funds. But the business is set up to cater for that demand with its Active Savings offer, covering banking products, money market funds and short-dated bonds. 

Therefore, it looks like the company can continue to earn operating cash flow from clients, regardless of general market conditions.

We’ve been in the grip of a bear market for a long time now. But I reckon the bull will likely gallop back soon. And when it does, the environment in the financial services sector could improve for firms such as Hargreaves Lansdown.

I’m optimistic about the outlook for the economy, businesses and individuals. And because of that, Hargreaves Lansdown looks to me like it may have recovery and growth potential as well as ongoing dividend attractions.

The stock opportunity strikes me as being well worth careful and thorough consideration now.

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.

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown 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.

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