UK share prices have started to pick up in the past few months, and that means dividend yields are falling. But there are still some great dividend forecasts out there.
These are my top three, high up on my list of possible buys for 2024. And I’ll explain why.
Long-term cash cow
If I’d had the cash, I would have bought M&G (LSE: MNG) shares in 2023. The investment manager was on a forecast yield of more than 10% a few months ago.
But we’re still looking at a broker forecast of 9.3%, and maybe getting close to 10% again by 2025.
The risk seems to me to be all about market sentiment. While people don’t have the money to spare, and are pessimistic about the economy, they shove less of their cash the way of investment managers.
But things will surely change, won’t they? The Bank of England seems firm about keeping interest rates high for the time being. And we might need to see some falls before M&G’s popularity rises.
But if there’s a good future for the UK stock market, investor funds will surely return. And I reckon that could make M&G a long-term cash cow.
Back in fashion
I might not buy British American Tobacco (LSE: BATS) for ethical reasons. But looking at it purely from an investing stance, it’s possibly the dividend stock I’d most like to buy now.
Investors are returning to the stock now too. It was one of the top three buys at investing platform AJ Bell in November.
The firm is a leader in alternative tobacco products and that, I think, gives it an advantage over Footsie rival Imperial Brands.
The main danger is that tobacco really might have no long-term future. But even if that’s the case, I can see it being a popular product for a good few decades yet.
Oh, I nearly forgot the dividend forecast. For 2023, the mooted yield is at 10.1%. And the City sees it rising above 11% by 2025.
All-time favourite
National Grid (LSE: NG.) is a strange one for me. That’s because I’ve often thought it might be the FTSE 100’s very best long-term dividend stock.
But I’ve never bought any. That’s because every time I’ve had cash to invest, I liked something else better. But 2024 might be the year I finally add some to my Stocks and Shares ISA.
The shift away from gas is probably keeping some investors away. And that, coupled with the costs of beefing up the electric grid as that takes over, is something we need to watch in the next few years.
Dividend cover by earnings tends to be a bit thin too, so that might be a threat. Still, National Grid has good earnings visibility. And a forecast yield of 5.4% looks very good to me. It’s by no means the biggest, but I think it could be one of the most reliable.
