UK investing: 2 of the best dividend shares to buy now!

The stock market might still be ravaged by uncertainty, but plenty of UK dividend shares offer big shareholder payouts. Here are two I’d buy today.

| More on:

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.

Happy couple showing relief at news

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.

sdf

The economic outlook remains uncertain, but plenty of top-notch dividend shares continue to reward patient investors holding on during this storm.

The industrials and construction industries are two prime examples of sectors losing favour. And while the cyclical downturn is placing pressure on earnings, plenty of rock-solid enterprises are seemingly being sold off on short-term problems.

So much so that two companies in particular are starting to look like attractive buying opportunities in my eyes. Let’s take a closer look.

Should you invest £1,000 in Rs Group Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rs Group Plc made the list?

See the 6 stocks

Eliminating logistical headaches

The global manufacturing industry grows increasingly complex as more specialised components are needed for the latest devices, equipment, and technology. However, what’s often overlooked is the nightmare this creates in terms of supply chains.

RS Group (LSE:RS1) simplifies this entire process by acting as a middleman. Instead of companies building a list of potentially hundreds of different suppliers, they can instead rely on RS Group to source these components on their behalf. With a portfolio of over 750,000 products from more than 2,500 global suppliers, the company has become an essential cog in more than 1.1 million businesses worldwide.

However, the shares are down nearly 30% in the last 12 months as demand slows in the face of weakened economic activity. And with the Purchasing Managers Index dropping to 42.5 in August, the slowdown in sales looks set to continue. As a quick oversimplified crash course, any value below 50 indicates a manufacturing contraction.

But this isn’t the first time RS Group has had to deal with an unfavourable operating environment. With a cash-rich balance sheet, I’m optimistic it will push its way through once again. And in the spirit of buying low, snapping up some shares at a P/E ratio of 12 sounds like a good deal, in my mind.

Accelerating construction

The residential real estate market is another sector that seems to be in contraction. With interest rates ramping up the cost of mortgages, demand for new housing has slowed. And this has created quite a headwind for Somero Enterprises (LSE:SOM).

The firm designs and develops glorified laser-guided concretely laying machines. While it’s not the most seductive business model, these screed machines have proved immensely popular among contractors for their time, labour, and cost-saving advantages.

The only problem is with residential construction slowing down, demand is falling. And it’s starting to be reflected in the firm’s financial performance. In its latest 2023 interim results, revenue shrank by 14%, with pre-tax profits down by 30%.

Obviously, that’s not an ideal sight for dividends. Yet despite this earnings pressure, shareholder payouts remain intact. The cash-generating nature of this enterprise has flooded the balance sheet with ample liquidity over the years. And with its newest screed machine now in production, management is preparing to continue stealing market share once the economic landscape improves.

The bottom line

Both of these dividend shares are currently facing challenges. Yet fundamentally, they remain uncompromised and leaders in their respective fields. Despite this, both stocks are down by double-digits.

There remains a lot of short-term uncertainty. Nevertheless, I can’t help but think that these stocks have been oversold by impatient investors. And that’s why I’m considering adding these companies to my income portfolio once I have more capital to hand.


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.

Zaven Boyrazian has positions in Somero Enterprises. The Motley Fool UK has recommended Rs Group Plc and Somero Enterprises. 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.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

A pastel colored growing graph with rising rocket.
Investing Articles

Here’s how investors could target £11,384 of passive income from 1,549 shares in this FTSE 250 dividend gem!

This FTSE 250 advanced materials firm delivers a very high dividend yield that could generate a big annual income stream…

Read more »

A handsome mature bald bearded black man in a sunglasses and a fashionable blue or teal costume with a tie is standing in front of a wall made of striped wooden timbers and fastening a suit button
Investing Articles

Is Opendoor at $2 the next millionaire-maker Nasdaq stock?

Some are betting that Opendoor Technologies (NASDAQ:OPEN) is the next meme stock to make investors filthy rich. Should I join…

Read more »

GSK scientist holding lab syringe
Investing Articles

Down 18% since September, is it time for me to capitalise on GSK’s bargain-basement share price?

GSK’s share price has fallen a lot in 10 months, which means it could be a huge bargain. I ran…

Read more »

Business manager working at a pub doing the accountancy and some paperwork using a laptop computer
Dividend Shares

Can this UK stock sustain the current 11.14% dividend yield?

Jon Smith talks through the reasons why he thinks a top UK stock’s juicy yield can be maintained in the…

Read more »

Wall Street sign in New York City
Investing Articles

Billionaire Bill Ackman has over 20% of his FTSE 100 fund in this one stock

Our writer explores why one of Wall Street's best-known investors has loaded up on this S&P 500 growth stock for…

Read more »

National Grid engineers at a substation
Investing Articles

£10,000 invested in this UK monopoly could generate a second income of £1,232 a year

Our writer explains how a £10,000 investment could help generate a healthy second income every year. But there are some…

Read more »

Businesswoman calculating finances in an office
Investing Articles

As 3i shares hold steady after the firm’s Q1 update, what should investors do?

After 3i reports steady progress in Q1, is it still one of the best FTSE 100 shares for investors seeking…

Read more »

DIVIDEND YIELD text written on a notebook with chart
Investing Articles

These 2 dividend shares are yielding at least 8.4%!

Our writer looks at two FTSE dividend shares that are offering double-digit yields. However, there are reasons to be cautious.

Read more »