Right now, I think there are two worth looking at.

Bodycote

Bodycote‘s (LSE:BOY) one of those businesses that doesn’t get much airtime. It provides heat treatment and thermal processing services to manufacturers across aerospace, automotive and industrial markets. Essentially this is includes hardening and strengthening metal components for customers who have no practical alternative but to outsource.

The income case is straightforward. The company offers a forward dividend yield of 4%. The payouts have been growing at a compound annual rate of around 3% over recent years. Importantly, cover’s improving to above two times next year as earnings recover.

But the growth angle is what makes it interesting right now. Forward earnings per share are forecast to jump over 70% in 2026 following a difficult 2025, leaving the stock trading on just 12 times forward earnings. In 2027, growth normalises at around 13.7%, but that still looks good on an earnings/growth-adjusted basis.

The analyst consensus target sits 38% above the current price, with nine brokers covering the stock. Down 24% from its 52-week high, the sell-off looks overdone relative to the earnings recovery now underway.

Risks? Well, revenue growth has been a bit slow despite earnings recovering. Investors will want to see organic revenue growth restored or the share price revival may never come.

Morgan Advanced Materials

Morgan‘s (LSE:MGAM) in the middle of a genuine transformation. The company makes advanced carbon and ceramic materials and has been simplifying its portfolio after years of operating too many businesses at once.

And it looks like the transformation isn’t over yet, with the company reviewing a potential sale of the Thermal Products division. This is the firm’s laggard from a margin perspective, but it represents a good proportion of revenue.

If a sale goes ahead, Morgan’s left with two higher-margin units in Performance Carbon and Technical Ceramics. Collectively, they’re running at blended margins above 12%. That’s a meaningfully better business than the market’s currently pricing.

The income credentials here are arguably even stronger than Bodycote. It offers a forward yield of 5.7%, with EPS forecast to grow 25% in 2026 and a further 18% in 2027. The stock trades on 10.9 times forward earnings, falling to 9.6 times the year after.

There are, of course, risks here too. Dividend coverage at 1.55 times for 2026 looks a bit weak. Net debt at £234m is also worth watching.

In short, neither of these companies are without blemishes. But as income stocks with a credible growth story behind them, both deserve serious consideration at current prices.

The post 2 income stocks that could offer serious growth too as the ISA deadline approaches appeared first on The Motley Fool UK.

But as always, it’s worth looking at what’s driving the optimism — and the potential risks.

Tesco

Tesco (LSE: TSCO), the UK’s largest supermarket chain, is back in the spotlight after a series of analyst upgrades. UBS lifted its price target to 500p, while RBC Capital nudged its forecast to 445p, reflecting growing confidence in Tesco’s performance.

The grocer recently raised its profit guidance for the year after strong interim results, showing resilience despite cost pressures and fierce competition.

But it’s not all plain sailing. A potential price war looms as rival supermarkets slash prices ahead of the festive season. Tesco has already reduced prices on thousands of products to attract customers, but that strategy comes with risk.

Margin compression remains a concern if competition intensifies or inflation persists. Investors should weigh up whether the retailer can defend its market share without sacrificing too much profitability.

HSBC

HSBC (LSE: HSBA) also found itself in analysts’ good books this month, with Goldman Sachs raising its price target to 1,089p while keeping a Buy rating. The bank continues to focus on its strategy of simplification and efficiency, cutting costs and leaning into its strongest growth markets — particularly in Asia.

It’s also been active in returning capital to shareholders through buybacks, highlighting management’s confidence in future earnings. Its return on equity (ROE) is expected to climb in the coming years as it benefits from stable interest rates and disciplined cost control.

But banks never operate without risk. A slower-than-expected rate-cut cycle, tighter regulatory oversight, or credit losses in emerging markets could all dent profits. 

For investors thinking about financial stocks, it might make sense to consider HSBC, but with a clear understanding of the global factors that could affect its earnings power.

Bodycote

Engineering group Bodycote (LSE: BOY) was another name receiving positive attention, as Deutsche Bank lifted its price target from 700p to 860p with a Buy rating. The bank’s analysts pointed to growing confidence in the company’s Aerospace and Defence division, which has been a key driver of revenue.

The company’s focus on thermal processing and advanced materials technology continues to position it well in high-spec manufacturing markets. In late July, the company’s share price surged 12.3% after it announced a £30m share buyback programme aimed at enhancing shareholder returns.

That said, it remains exposed to cyclical industries like automotive and general manufacturing, which can be volatile if global growth slows. Rising input costs and labour pressures could also weigh on margins.

Still, with management targeting steady growth through 2028, some investors might see Bodycote as a quality cyclical worth keeping an eye on.

Final thoughts

Broker upgrades don’t guarantee share price gains, but they can highlight where the market sees improving fundamentals. Tesco, HSBC and Bodycote each offer something different — from defensive retail strength to financial stability and industrial growth potential.

For investors considering UK shares this month, these three might be worth a closer look, provided risks are carefully weighed and portfolios remain diversified.

The post 3 UK shares to consider this month as major brokers raise their price targets appeared first on The Motley Fool UK.

This is thanks to an improving climate for the aerospace sector, long-term commitments in defence spending, and an operational turnaround with a renewed focus on creating a leaner company that could command a higher valuation.

However, with the stock up around 14 times since then, it’s probably trading closer to its fair value than it has at any point over the past three years. And that’s pushing me to ask: are there other industrial stocks in the UK that could outperform Rolls-Royce shares?

Here are some ideas.

Bodycote

Bodycote (LSE:BOY) may not grab headlines like Rolls-Royce, but it could be worth considering. The heat-treatment specialist’s H1 2025 results were largely positive despite a 7.5% revenue dip, as CEO Jim Fairbairn’s Optimise, Perform & Grow strategy gathers pace.

Investors were glad to see that cost savings are running ahead of plan, with site rationalisations and a French £20m asset sale bolstering efficiency. Crucially, aerospace and defence demand is offsetting weakness in autos and general industry, positioning Bodycote well for recovery.

Trading at just 13.5 times adjusted forward earnings, falling to 12 next year, the valuation looks undemanding. A near-4% dividend yield, coupled with buybacks and a solid balance sheet, strengthens the investment case.

Risks include prolonged industrial softness and reliance on cyclical aerospace demand. But Bodycote could be a more balanced industrial pick for long-term investors than Rolls-Royce.

Melrose Industries

Melrose Industries (LSE:MRO) has been quietly impressing the market in recent months. H1 2025 results showed adjusted operating profit of £310m, up 29% year on year and well ahead of forecasts, with margins rising to 18%. Cash flow also strengthened, despite supply chain bottlenecks and tariff pressures. Engines revenue grew 11%, while Structures rose 3%.

Management is targeting over 20% annual earnings growth through to 2029. With a current price-to-earnings (P/E) ratio of 15.2 and a price-to-earnings-to-growth (PEG) ratio of 0.75, this stock looks great on paper. Rolls-Royce, by comparison, trades closer to 40 times forward earnings, with a PEG ratio over two.

The stock is now trading around 10% below the average share price target, but I believe it could go much higher. It has all the hallmarks of a top-quality company, the market just needs further evidence of its operational strength.

Risks remain, particularly around aerospace supply chains, tariffs, and currency moves. Net debt is also sizeable, at around £1.4bn. However, with sole-source positions on 70% of its sales and operating leverage improving, Melrose could be a stronger long-term industrial pick than Rolls-Royce. It’s certainly worth looking at more closely.

My take

I like industrial stocks, especially ones with strong economic moats. Personally, I believe all three of these companies are worth considering, but I do believe Bodycote and Melrose could outperform as the market looks for industrial alternatives.

The post These UK industrial stocks could beat Rolls-Royce shares over the next 12 months appeared first on The Motley Fool UK.

Tricky trading

I doubt a heat treatment and thermal processing services provider is on many income investors’ radars. However, FTSE 250-listed Bodycote (LSE: BOY) has a fantastic history of raising its total dividend year after year. Even a global pandemic couldn’t stop this rich run of form!

Despite this, the shares have lost all of the gains picked up from earlier in the year and now sit just below where they stood in January. A good portion of this can probably be attributed to “challenging” market conditions for its Automotive and General Industrial (AGI) division.

There’s no guarantee this won’t continue. I’m not about to say that those prized dividends are completely safe either. Indeed, cash distributions can be the first thing to be shelved (or reduced) by a company in tough times.

Ready to recover?

On a more optimistic note, broker RBC recently upgraded the company to Outperform based on its belief that growth in the engine aftermarket should help to offset issues in the supply chain. It also thinks that general industrial demand will bottom-out in the next six months or so. Should this be the case, I think existing holders can rest easy.

Out of interest, Bodycote shares currently change hands on a price-to-earnings (P/E) ratio of just 10 for FY25 (beginning in January). That’s low for the sector and the UK market as a whole.

I’m going to wait for next trading update before deciding whether to act. If last year is anything to go by, this should arrive in November.

Slowing sales

A second mid-cap hitting a 52-week low recently has been IT services specialist Computacenter (LSE: CCC).

Like Bodycote, Computacenter’s fall from grace — down 13% in 2024 — seems to be related to a dip in trading.

Revenue and adjusted pre-tax profit have been falling in 2024. So far, the company has attributed this to the “expected normalisation of Technology Sourcing volumes” following some seriously good numbers last year.

Whether things will improve markedly in the short term is open to debate. But management did say that it expects stronger momentum in the second half of FY24.

Great record

Again, I fancy this company remains unknown to most people investing for passive income. That’s despite cash returns being lifted consistently over the years.

There was one wobble in 2020 when the company resisted paying a final dividend. But I’m not about to judge Computacenter too harshly on this. At the time, many businesses were simply being cautious.

As I type, this business is expected to yield 3% in FY24. That’s pretty average for a UK stock. But at least it’s expected to be safely covered by profit.

Similar to its index peer, I’m holding back until the next trading update before deciding whether to make a move.

Fortunately, my patience won’t be tested all that much. The next statement is due on 30 October.

The post At 52-week lows, I’m considering buying these top dividend growth shares appeared first on The Motley Fool UK.

In my experience, many of those that tick both of these boxes tend to be pretty boring companies. And that’s just fine with me! Consistency is the goal here, not excitement.

Let’s look at a couple I’d consider buying if creating a second income was my primary goal.

Reliable payer

Bodycote‘s (LSE: BOY) one example of a business I’d back to keep raising its cash payouts going forward. Why? Because this FTSE 250-listed heat treatment and thermal processing services provider has build up an excellent record of doing just that over many years. There’s even been the odd special dividend along the way.

Of course, just because a company’s thrown money at its investors in the past doesn’t guarantee it will continue to do so, especially if trading takes a knock.

Bodycote’s no exception. It’s worth being aware that recent interim results for the first six months of 2024 mentioned “challenging” market conditions for its Automotive and General Industrial (AGI) division. As a result, the company’s needed to take “a number of decisive actions to balance costs and capacity with near-term demand“.

Don’t get greedy

On a more positive note, the firm made no change to its full-year outlook. This makes me think the 3.7% dividend yield looks safe. In fact, analysts suspect the payout will be covered over twice by expected profit.

Some may scoff at such an average yield when there are other companies offering nearly triple that. But I’d rather receive a lower but rising payout than never receive a higher one. What looks too good to be true often is.

5% yield

Fellow FTSE 250-listed wealth manager Rathbones (LSE: RAT) is another deadly dull dividend demon that’s been increasing the money it returns to investors for donkey’s years.

I find this impressive, not least because it operates in a sector where sentiment can quickly change depending on macro-economic headlines. A smidgen over 5%, the dividend yield’s also chunky and looks likely to be covered comfortably by profit.

One potential fly in the ointment is last year’s merger with Investec Wealth & Management. Although this seems to have gone well, it may take a bit more time to truly judge whether this move was truly in the interest of shareholders.

Cheap to buy

Still, it’s not like the valuation looks stretched. The shares currently change hands for a very reasonable 11 times expected FY24 earnings. That might even turn out to be a bargain in time if July’s interim results are anything to go by.

In a sign that risk appetite’s recovering, Rathbones reported a 3.4% rise in its funds under management and administration for the first six months of 2024.

If and when confidence returns en masse — perhaps after a succession of interest rate cuts both here and in the US — I wonder if I might see a nice positive gain on top of those dividend payments if I were to buy now.

The post 2 dull but delightful stocks I’d back to keep growing dividends appeared first on The Motley Fool UK.

My reasoning’s pretty simple. Consistently rising cash returns tend to be indicative of a business in rude health. Those in the latter camp tend to be treading water.

Britvic

FTSE 250 firm Britvic (LSE: BVIC) is one of three stocks I’ll consider buying if and when funds becomes available. Although not completely immune from wider economic wobbles, the drinks industry tends to be more resilient, given that its low-ticket items tend to be bought out of habit.

Indeed, this degree of earning predictability has allowed the owner of brands such as Tango and Robinsons to keep throwing increasing amounts of money back at its investors nearly every year.

In 2024, the forecast yield currently stands at 3.4% — higher than that offered by the index as a whole.

Notwithstanding all this, one potential risk is that increasingly health-conscious consumers begin turning away from fizzy/sugary drinks. Lowers sales could effectively bring that run of annual rises to an end. At best, it might hinder the size of future hikes.

With this in mind, it seems prudent to spread my money around other stocks as well.

Bodycote

Some of that diversification could come from another FTSE stock that boasts solid dividend credentials, namely heat treatment processes provider Bodycote (LSE: BOY).

To be clear, a company that specialises in making metal “stronger, more durable, and more corrosion resistant” isn’t one that’s likely to ever grab the headlines.

Dividend-wise however, it’s just the sort of thing I’m looking for. We’re talking years and years of increases, not to mention the odd special payment along the way.

Currently, this trend shows every chance of continuing. Boasting a forecast yield not dissimilar to Britvic, Bodycote’s cash returns also look to be covered over twice by projected profit.

Then again, trading here’s arguably more cyclical, with demand from sectors such as energy, automotive and aerospace dictated by general economic sentiment.

Historically, Bodycote’s shown itself to be robust during such periods. But the future won’t necessarily mirror the past.

So what else could I buy (when funds permit) to help soften any blows?

Safestore

Last on my list is self-storage provider Safestore (LSE: SAFE). Again, Safestore operates in a completely different space to the other two mentioned here. This could make for a less volatile portfolio, at least in theory. As an investor, I also love the simplicity and predictability of a business plan that involves charging people to house their clutter.

On the other hand, it’s no secret that anything property-related has been in the doldrums for a while now. In line with this, Safestore’s share price has fallen 11% in the last 12 months. There’s a chance it could have further to fall if the Bank of England keeps delaying its first interest rate cut.

So long as I’m being paid to be patient however, any drop in the value of my stake isn’t likely to concern me. A 3.6% yield feels like decent compensation, especially as Safestore’s also gaining a reputation as a dividend grower par excellence.

And if/when the UK market does start motoring again, there could be a nice capital gain too.

The post Passive income powerhouses! 3 FTSE stocks I’d consider buying for rising dividends appeared first on The Motley Fool UK.

Since then, the industrial services provider has been shooting up. The share price chart shows the stock has risen by around 10% and now changes hands in the ballpark of 767p (20 May).

However, for investors working on a time horizon longer than a mere two or three weeks, I reckon there may be much more business progress to come.

Recovery and growth

My hope is the share price will reflect strong operational gains in the coming months and years to drive a decent investment return for shareholders.

One of the main reasons for my optimism about Bodycote’s prospects is that I’m bullish about the outlook for economies around the world and the UK’s in particularly.

Bodycote looks well placed to benefit from resurgent industry around the world as economies recover. The firm provides thermal processing and heat treatment services for the energy, automotive, defence, aerospace and industrial sectors.

However, the need for recovery follows a decline, and such cyclicality is one of the biggest long-term risks for Bodycote shareholders.

Scoping back on the chart, it’s clear the stock has moved essentially sideways over 10 years. That’s a frustrating outcome for long-term investors. However, past performance is not a reliable guide to the future.

Some businesses with cyclically sensitive operations have staged impressive growth in operations over many years. One example among many is building services products distributor Ferguson.

Meanwhile, Bodycote has a modest net debt position on the balance sheet, suggesting the business is well-financed for its next growth phase. On top of that, the dividend record is impressive, with annual increases every year since at least 2018 – even through the pandemic.

The cash flow record looks robust, and City analysts expect normalised earnings to increase by almost 18% this year and by 14% in 2025.

Targeting higher-growth sectors

Bodycote looks like a survivor and a winner as we emerge from a troubled few years for the economy. Part of the reason for the robust earnings forecasts is that cost pressures have been easing for the business.

However, that’s not the whole story. The directors also have a plan for growth and they’re working it hard.

Already, more than 60% of the firm’s headline operating profit comes from the higher-growth areas of specialist technologies, emerging markets and civil aerospace.

The directors reckon those sectors provide higher-margin growth opportunities. Looking ahead, they expect the firm’s business to flourish within those categories and to “continue” to outperform the company’s “classical” heat treatments operations.

Meanwhile, the forward-looking earnings multiple for 2025 is just below 14 and the anticipated dividend yield is about 3.4%. That looks like a fair valuation, to me.

There are no guaranties of a positive investment outcome here, as with any business or stock. Nevertheless, I reckon Bodycote looks like one to tuck away and forget. Wake me up in five years’ time and let’s see how it’s doing then!

The post My top growth stock for May is flying, but I think it’s just getting started! appeared first on The Motley Fool UK.

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

Ashtead 

What it does: Ashtead is a construction equipment rental company that operates in the US, Canada, and the UK.

By Edward Sheldon, CFA. I’m bullish on Ashtead (LSE: AHT) for a couple of reasons right now. 

One reason is that the company is well positioned to benefit from the artificial intelligence (AI) boom. In the years ahead, major semiconductor companies such as Taiwan Semiconductor, Samsung, and Intel are going to be building a lot of new manufacturing plants in the US to handle the demand for AI chips. This construction boom should provide a very supportive backdrop for Ashtead, whose equipment is likely to be in high demand. 

Another reason I like the stock is that its valuation is quite reasonable. Currently, the forward-looking price-to-earnings (P/E) ratio is 17. I think that’s attractive given the long-term growth story associated with the building of chip plants and other infrastructure.  

Now, one risk to be aware of here is that Ashtead has some debt on its balance sheet. This debt could come into focus if interest rates rise from here, putting pressure on the share price. 

All things considered, however, I think the risk/reward proposition is attractive.  

Edward Sheldon owns shares in Ashtead.

Bodycote

What it does: provides heat treatment and thermal processing services to the aerospace, defence, energy, automotive and industrial sectors.

By Kevin Godbold.  Bodycote (LSE: BOY) posted full-year figures for 2023 showing growth in revenue, cash flow and earnings. To reward shareholders, the directors slapped 7% on the dividend and initiated a £60m share buyback programme.

Trading is going well and the cash is rolling in. The share price has been trending higher since last October, and City analysts pencilled in double-digit percentage earnings increases for 2024 and 2025.

Cost pressures have been easing for the business and the directors said they are “confident” in the firm’s prospects for ongoing profitable growth.

One risk, however, is cyclicality. That has shown up as volatility in the multi-year record for earnings and in a variable valuation. Previously, the stock has been prominent as a high dividend payer because of its suppressed valuation.

The multi-year dividend record is robust, and the yield well above 3% (24 April) is a good companion to the company’s enhanced growth prospects now.

Kevin Godbold does not own shares in Bodycote. 

Kainos Group

What it does: This tech company offers digital services and Workday tools to support businesses across the world.

By Oliver Rodzianko. After growing rapidly from 2020 to 2023, Kainos Group (LSE:KNOS) has slowed down slightly now. However, its long-term outlook still looks bright, and analysts expect things to pick up considerably in 2025.

The reason I’m excited about the growth slowdown is that I think the market has overreacted to this. The shares are down over 55% from their all-time high as I write. That means I might be buying the stellar growth that can come with a leading British tech company at a valuation the industry rarely presents.

Kainos is a leader in digital transformation. However, my main concern is that it hasn’t developed anything truly groundbreaking in the field yet. That means it could be more vulnerable to competition.

Nonetheless, with multiple areas of competency, including in Workday implementation for businesses, I think this tech firm has a strong future ahead of it.

Oliver Rodzianko does not own shares in Kainos.

On the Beach

What it does: On the Beach is one of the UK’s leading online retailers of short-haul beach holidays. 

By Paul Summers. Shares in holiday firm On the Beach (LSE: OTB) may have fallen back in 2024, but I’m optimistic we could see the beginning of a reversal when interim results are released next month. 

Having experienced its “best ever summer” in 2023, the company began its new financial year with “a record forward order book and significant momentum”. A recent partnership with Ryanair also bodes well and could push some analysts to revise their projections.

Of course, ongoing geopolitical tensions aren’t exactly helpful to any firm in the travel sector. The risk here is that things get worse before they get better. 

Then again, the stock already changes hands for just 10 times forecast earnings. Notwithstanding the bias that comes with already being invested, that looks too cheap to me.

When discretionary income rises as interest rates are cut, I’m optimistic my patience will pay off.  

Paul Summers owns shares in On the Beach

The post Best British growth stocks to consider buying in May appeared first on The Motley Fool UK.

From this list, I’ve narrowed down my selection to just three shares. These are stocks that I already own or would be happy to buy today, if I had fresh cash to invest.

Stronger for longer

Industrial group Bodycote (LSE: BOY) specialises in heat treatment. This process adds strength and corrosion-resistance to metal components, such as those used by aircraft and automotive manufacturers.

There are obviously some cyclical risks to this business. Sales could slow during a major recession. However, Bodycote is a market leader in this sector and has traded successfully through cycles before.

The group’s international footprint and standardised offering appeals to larger customers, and management reported strong demand from aerospace and oil and gas customers last year.

Bodycote’s accounts show attractive double-digit profit margins and the group’s cash generation is generally good, supporting reliable dividend payouts.

The stock currently trades on around 13 times forecast earnings, with a 3.5% dividend yield. I think that could be a good entry point for a long-term investment.

Property recovery

There are lots of ways to play the UK property market, but there are fewer choices for investors who also want to gain exposure to international real estate.

One company that spans almost the whole market is global real estate group Savills (LSE: SVS).

Founded in 1855, Savills has expanded from a London-based agent into an international business serving clients in commercial real estate and high-end residential markets.

Because of its market reach, Savills’ results statements also tend to provide interesting commentary on property market conditions.

In the company’s most recent update, chief executive Mark Ridley said he thought that after a difficult year in 2023, “most markets appear to be past the moment of peak uncertainty”.

Mr Ridley expects to see signs of a broader recovery emerge later this year.

It’s too soon to know if this optimistic view is correct, but the Savills share price is well down from its 2022 highs and looks affordable to me. Broker forecasts suggest a dividend yield of 3.1% for 2024, rising to 3.5% in 2025.

A contrarian choice?

Chemicals group Johnson Matthey (LSE: JMAT) makes most of its profits from catalytic converters for cars, buses and trucks.

This business has fallen out of favour with investors over the last few years, due to concerns about the long-term future of the group’s core clean air business. Some growth projects – such as a planned move into battery technology – have also failed to deliver as hoped.

There are obviously some risks here. But I don’t think demand for catalytic converters will disappear any time soon, especially not for heavy vehicles.

In the meantime, the company is expanding into hydrogen fuel cells – where it has some experience.

Johnson Matthey has been in business for more than 200 years and has adapted to changing technology before. With the stock trading on just 10 times forecast earnings and offering a yield of over 4%, I think the business is starting to look cheap.

The post 3 top FTSE 250 dividend stocks I’d buy for a second income today appeared first on The Motley Fool UK.

[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 Carman. Moneysupermarket.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.

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