Last Updated on September 1, 2023 by Prakash Kolli
The UK High Yield Dividend Aristocrats 2023 are UK stocks that have increased or maintained their dividend for at least seven consecutive years. However, that fact alone does not qualify a stock as a UK High Yield Dividend Aristocrat.
To be included on the list, a company must meet the following updated criteria:
- The company must be a member of the S&P United Kingdom BMI. The stock must also trade on the London Stock Exchange in British pounds.
- The stock must have increased or maintained its dividend stable for at least seven consecutive years. The yield cannot be greater than 10%. New index constituents must have a maximum of 100% dividend payout ratio. Existing index constituents must have a non-negative dividend payout ratio.
- The stock must have a market capitalization of at least $1 billion as of the rebalancing date.
- The median daily value traded (MDVT) must be at least $5 million.
- During the quarterly rebalancing, the weighting of a single stock is capped at the lower of 5% or five times the stock’s liquidity weight.
- Each GICS sector weighting is capped at 30%.
- Index weightings are based on dividend yield.
- The weighting of each country is capped at 30%.
- Index constituents are reviewed for dividend omissions and cuts every month. If a stock publicly announces a dividend suspension or cancellation, it is removed from the index and replaced by the highest-ranked stock that is not already in the index.
These companies have survived periods of inflation, stock market crashes, global crises, and deep recessions but still met the abovementioned criteria. Often these are the most prominent and typically well-known stocks in the UK with high dividend yields. Hence, this list serves as a starting point for small investors seeking to research potential ideas for UK dividend growth stocks.
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Differences with the U.S. and Canadian Dividend Aristocrats
These criteria are very different from those used to determine the list of Dividend Aristocrats in the United States, which must be in the S&P 500 Index and need 25+ years of increasing dividends. There are currently about 65 stocks in the U.S. Dividend Aristocrats. This number is not capped. On the other hand, there are only 36 stocks in the UK High Yield Dividend Aristocrats 2023 list as of July 31, 2023. But this is by design.
These criteria are also very different from those used to determine the list of Canadian Dividend Aristocrats, which have smaller market capitalization and consecutive annual dividend increase requirements. The UK High Dividend Aristocrats 2023 are similar, though, in that the indices are both weighted by yield.
Market Update for The UK High Yield Dividend Aristocrats 2023
The UK High Yield Dividend Aristocrats 2023 currently (as of July 31, 2023) has a dividend yield of about 4.19%. The average forward price-to-earnings (P/E) ratio is approximately 13.51X, while the trailing P/E ratio is about 16.67X.
The mean market capitalization is roughly 22,657 million GBP (all values are in Great British Pounds), and the median is approximately 7,506 million GBP. The market cap ranges between about 938 million GBP to 165,246 million GBP. The total market capitalization of the UK High Yield Dividend Aristocrats is approximately 815,636 million GBP.
In 2022, the UK High Yield Dividend Aristocrats provided a total return of (-8.03%). This value was the first negative return since 2020 and the third negative one in the past 5-years. The price return was (-11.71%). The high dividend yield of the stocks on this list mitigated the negative price return.
The chart below shows the historical performance over the trailing 10 years. The total annualized return in the past 10 years was 3.95%, and over the past 5 years, it was (-0.02%). The standard deviation over the past 10 years was 13.78% and over the past 5 years was 16.55%.
The table below shows the calendar year’s performance from 2013 to 2022.
Other Dividend Growth Stock Lists
For US stocks, we have previously provided the following lists:
- List of Dividend Kings in 2023
- List of Dividend Aristocrats in 2023
- List of Dividend Champions in 2023
- List of Dividend Contenders in 2023
- List of Dividend Challengers in 2023
- Dogs of the Dow in 2023
For Canadian stocks, we have previously provided the following list:
Other dividend stock lists
- American Stocks Paying 100+ Years of Dividends
- Canadian Stocks Paying 100+ Years of Dividends
- Net Lease REITs
- Data Center REITs
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Details on the UK High Yield Dividend Aristocrats 2023
The UK High Yield Dividend Aristocrats 2023 has a target of 40 stocks. In practice, the actual number is typically between 30 and 40 stocks. There are 36 stocks on the list as of this writing.
UK Dividend Aristocrats Sector Breakdown
The sector breakdown for UK High Yield Dividend Aristocrats 2023 is seen in the chart below as of July 31, 2023.
Stocks from the Financials sector have the most significant representation on the list of UK High Yield Dividend Aristocrats at about 28%. The sector with the following highest representation is Industrials at approximately 17.6%. The sector with the third-highest representation is the Consumers Staples, at roughly 13.8%.
The top three sectors comprise the majority of the UK High Yield Dividend Aristocrats at59.3%.
Stocks in the Financial sector tend to have more volatile earnings and cash flows that depend on the stock market valuation and interest rates. However, the scale of large financial institutions lets them pay a growing dividend over time.
The Industrial sector is also cyclical, but many of these stocks tend to grow revenue and earnings over time, allowing them to maintain a stable dividend at the very least.
Consumer Staples stocks typically are slow-and-steady for revenue and earnings per share growth. These stocks have relatively stable earnings and cash flow characteristics. In addition, the companies usually grow profits slowly over time, permitting annual dividend increases.
This sector breakdown is similar but not the same as the US Dividend Aristocrats list, with Consumer Staples, Industrials, and Materials as the top three sectors.
The sector breakdown is unlike the Canadian Dividend Aristocrats list, with Financials, Energy, and Real Estate as the top three sectors.
Fund Performance Differences
As a group, some funds have exhibited lower annualized total returns than the UK High Yield Dividend Aristocrats index. For example, one fund has displayed lower annualized returns of 4.39% after subtracting expenses than the underlying index of 3.90% since inception.
This difference is likely due to annualized tracking error, which is the difference between the fund’s and index’s returns. However, this difference can also occur due to changes in the underlying index resulting in higher transaction costs for funds.
Note that there needs to be more clarity between the actual index and some exchange-traded funds or ‘ETFs’ that use the index as the basis of stock selection. For example, at least one fund uses 7+ consecutive years of dividend growth as a criterion for inclusion instead of 10+ years of dividend growth.
List of Top 10 UK High Yield Dividend Aristocrats 2023
The stocks with the top 10 weighting in the UK High Yield Dividend Aristocrats are listed below. Note that the weightings are based on dividend yield. The top 10 stocks in the list constitute about 46.3% of the UK High Yield Dividend Aristocrats.
|IG Group Holdings PLC||5.13|
|British American Tobacco PLC||5.09|
|Legal & General Group||4.93|
|Intermediate Capital Group||4.84|
|Hargreaves Lansdown PLC||4.70|
|Primary Health Properties||4.66|
|National Grid PLC||4.65|
|Drax Group PLC||3.96|
Prior Year Lists and Articles
- UK High Yield Dividend Aristocrats 2022
- UK High Yield Dividend Aristocrats in 2021
- UK High Yield Dividend Aristocrats in 2020
Related Articles on Dividend Power
- BP PLC (BP): Another Oil Major Cut the Dividend
- Royal Dutch Shell (RDS.A) – The Historic Dividend Cut
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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.