Best British dividend shares to buy for March

Every month, we ask our freelance writers to share their top ideas for dividend shares to buy with you — here’s what they said for March!

[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.