Investing in dividend stocks is one of the easiest ways to build a second income. These stocks pay investors a proportion of company profits, in cash, several times per year.
Here, I’m going to highlight three UK-listed stocks that strike me as good picks for investors seeking income today. All three have magnificent track records when it comes to paying dividends.
BAE Systems
First up is leading defence and security company BAE Systems (LSE: BA.).
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From an income investing perspective, there’s a lot to like about BAE Systems.
For starters, it operates in a fairly stable industry. Given the level of geopolitical tension globally, governments are unlikely to suddenly stop spending on defence any time soon. This means that, looking ahead, earnings and dividends should be quite predictable (although there’s never any guarantee with dividends).
Secondly, the company has a great track record when it comes to increasing its payout. Over the last 10 years, it has increased its distribution every year.
On the downside, the yield here isn’t that high. Last year, the group paid out dividends of 27p per share, which equates to a yield of a little under 3% today.
However, with global defence expenditure likely to rise, I think this stock has the potential to deliver solid total returns (capital gains and dividends) in the years ahead.
Softcat
Next, we have Softcat (LSE: SCT). It’s a British company that helps organisations with their IT infrastructure (cloud computing, cybersecurity, data analytics, etc).
Softcat shares have experienced a major pullback over the last 18 months or so as tech shares have fallen out of favour, and I think it’s a good time to be building a position here.
This is a company that’s growing at a rapid clip as organisations across the UK get themselves up to speed digitally.
It’s also a company that’s extremely profitable, and has a history of rewarding investors with ‘special’ dividends on top of ordinary dividends.
Again, the yield here isn’t the highest. Currently, analysts expect Softcat to pay out 37.8p per share in dividends for the year ending 31 July. That equates to a yield of around 2.9% today.
And there’s no guarantee that the stock will return to its highs of 2021.
Yet with spending on tech set to remain strong in the years ahead, I think there’s a good chance the stock will provide healthy total returns going forward.
Murray Income Trust
Finally, we have the Murray Income Trust (LSE: MUT). Now this stock is a bit different to the other two as it’s an investment trust. These are essentially companies that invest in a range of stocks on behalf of shareholders.
I think Murray Income is worth a look for several reasons. Firstly, one of its main goals is to provide a high level of income for investors. Currently, the yield here is about 4.2%.
Secondly, it’s a ‘Dividend Hero’. This means that it has increased its payout every year for over 20 consecutive years now.
Third, it has outperformed the FTSE All-Share index by a wide margin over the last five years.
Of course, the trust is not going to outperform the market at all times. However, all things considered, I think it has a lot of appeal today.
