I love hunting for dividend stocks that may have gone unnoticed by the market. Investors searching for a second income typically head to the big beasts of the FTSE 100, where market leaders with strong balance sheets and diverse revenue streams lurk.
Tragically, this means a lot of quality dividend shares outside the Footsie slip through the cracks. The FTSE 250 carries exceptional income opportunities for share pickers, too. There are also many robust small-cap shares on the UK stock market with excellent dividend credentials.
Huddle in close, and let me reveal two ‘secret’ income stocks grabbing my attention right now: BRCK Group (LSE:BRCK) and YouGov (LSE:YOU). Want to know what makes them great dividend stocks to consider?
8.5% dividend yield
BRCK Group went by the name of Brickability until last month. You’ll probably now have a good idea of what it does — it makes and sells bricks, though recent acquisitions have boosted its presence in markets for other construction materials.
The firm has a great dividend track record, raising annual payouts even though market conditions have been less than ideal due to higher interest rates. The business has its exceptional cash generation to thank for this.
However, BRCK has had to bite the bullet and chose to freeze the interim dividend in November. The reason? It’s focusing more closely on debt reduction following some acquisitions.
On the plus side, trading remains extremely robust — both revenues and adjusted gross profit increased in the six months to September, driving cash flows higher. There’s no guarantee this resilience will continue as the Middle East conflict drags on, raising the prospect of Bank of England rate hikes.
But will this mean this year’s annual dividend slumps? City analysts don’t think so. They expect a full-year dividend of 3.5p per share, matching that paid in financial 2025. This produces a healthy 8.5% dividend yield.
Another top income stock
You may have heard of YouGov when reading or watching the latest political news. It’s best known for opinion polling, including projecting outcomes like who will be the next party in UK government.
What attracts less attention is its strong performance as a dividend stock. Shareholder payouts have risen every financial year since 2013, a record that’s tipped to continue. So YouGov shares yield a tasty 6%.
Dividends are never guaranteed, but in my view analysts’ dividend forecasts look pretty strong. A predicted 9.68p per share for this year is covered 2.9 times by anticipated earnings. A reminder: a reading of two or more provides a wide margin for error.
So what are the risks attached to YouGov shares? Last week, the company warned on profits due to heavy investment at its shopping data unit. Higher capital expenditure could remain a problem as AI disrupts traditional market research.
But this shouldn’t impact dividends, at least in the immediate future. Over the longer term, I’m confident its push into AI and automation can fuel strong earnings and dividend growth.
