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Amidst recent volatility in global markets, including the impact of weak trade data from China and falling commodity prices, dividend stocks present a stable income option for those navigating economic fluctuations. Here’s a look at three UK Dividend stocks providing dividend yields ranging from 3% to 8.1%.
Vertu Motors (LSE:VTU)
Overview and Operations
Vertu Motors plc, with a market capitalization of £232.68 million, operates as an automotive retailer in the UK. The company generates revenue primarily through its gasoline and auto dealership segment, achieving £4.72 billion in revenue.
Dividend Details
The company has announced a final dividend of £0.015 per share, yielding 3.1%. Dividends are supported by earnings, with a payout ratio of 30.9%, and cash flows, reflected in a 12.5% cash payout ratio. However, Vertu Motors' dividend history over the past decade has been marked by volatility and inconsistency. Recent efforts include a £3 million share buyback aimed at reducing share capital, potentially benefiting shareholder value. Earnings have seen a slight increase of 0.7%, and revenue grew from £4.01 billion to £4.72 billion year-over-year.
Record (LSE:REC)
Overview and Operations
Record plc, with a market capitalization of £123.11 million, specializes in currency and derivative management services. The company operates across various regions including the UK, North America, Continental Europe, Australia, and beyond, generating £45.38 million in revenue.
Dividend Details
Record plc offers a notably high dividend yield of 8.1%. The recent dividend distribution includes a final ordinary dividend of 2.45 pence per share and a special dividend of 0.6 pence. Despite this high yield, the company faces challenges as its high payout ratio (95%) and cash payout ratio (81.7%) suggest that dividends are less well-covered by earnings and cash flows, which raises concerns about sustainability. Recent financial results show a decrease in net income from £11.34 million to £9.27 million.
SThree (LSE:STEM)
Overview and Operations
SThree plc, with a market capitalization of £513.91 million, provides specialist recruitment services focused on STEM (Science, Technology, Engineering, and Mathematics) fields. The company operates in multiple regions including the UK, US, DACH (Germany, Austria, Switzerland), the Rest of Europe, the Middle East & Asia, and the Netherlands, generating significant revenue from these areas.
Dividend Details
SThree offers a dividend yield of 4.3%. While its dividend payments have increased over the past decade, they have exhibited some volatility, including drops exceeding 20% on occasion. The company’s dividends are well-supported by earnings, with a payout ratio of 39.2%, and cash flows, reflected in a 42.2% cash payout ratio. Recent results indicate stable net income of £28.11 million, and the interim dividend has been increased to 5.1 pence per share. SThree is currently trading at a discount relative to its estimated fair value and peers.
These three UK stocks offer varying dividend yields and have different financial dynamics. Vertu Motors provides a stable but historically volatile dividend, Record plc delivers a high yield amid concerns about dividend sustainability, and SThree offers a balanced approach with consistent, though occasionally volatile, dividend payments.
