4 UK dividend shares I’d buy in October

Looking ahead to October, Christopher Ruane would consider adding these four UK dividend shares to his portfolio. Here’s why.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

As markets settle into a busy trading season, I’m considering what UK dividend shares I might add to my portfolio in October to boost my passive income. Here are four ideas I would consider.

Two decade dividend raiser

The tobacco stalwart British American Tobacco has been raising its dividend annually for more than two decades. That points to the strength of its portfolio of brands including iconic smokes such as Lucky Strikes. These brands give the company pricing power even in an inflationary environment. Given that a lot of smokers are giving up the habit, that can help the company offset volume declines in some markets with pricing increases.

There’s more to the company than just cigarettes, though. A key risk is declining cigarette usage, which could hurt revenues and profits. BAT has responded to that through developing its next generation portfolio of products in areas such as vaping. That could help arrest revenue decline. In its interim results, reported revenue slipped less than 1% compared to the prior year. A changed product mix does risk lower profitability. But for now, with its 8% yield, I would consider adding more BAT to my portfolio in October.

Should you invest £1,000 in M&G right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if M&G made the list?

See the 6 stocks

Financial services giant

Many British investors will be familiar with financial services provider Legal & General thanks to its iconic multi-coloured umbrella logo. That brand familiarity is good for the business. It helps attract customers without the level of spending required by new market entrants like fintechs.

As an investor, I also appreciate the company’s progressive dividend policy. It currently yields 6.4%. Unlike some other insurers, it did not use the pandemic as cover for a dividend cut. The business has a long-term growth record and I think its proven business strategy could help support planned future dividend increases. But – as any insurer worth its salt knows – there is always risk. Any slip in underwriting standards, or price competition in insurance, could eat into L&G’s profits.

UK dividend shares in the utilities sector

A lot of investors think utilities make good picks among UK dividend shares, due to steady demand and regulated prices. That isn’t always the case: the pandemic shifted working patterns, which has impacts for where and when people need to access power. Realigning the power network to those changed needs could require more capital expenditure. That is a risk facing power network infrastructure specialist National Grid.

Nonetheless, I would consider adding the 5.5% yielding company to my portfolio in October. A busy month in the stock market could see turbulence. Utility stocks are sometimes seen as defensive. With power demand likely to stay strong for decades, I think National Grid offers an attractive pick for my portfolio among UK dividend shares in October.

Beaten down consumer goods giant

Heading into October, consumer goods giant Reckitt continues to look beaten down. While the FTSE 100 index has increased 19% over the past year, constituent share Reckitt has slumped 23%. It has struggled with a problematic infant formula business and cost inflation.

Both challenges risk continuing to dog the company. But I see its global portfolio of brands as a strong basis for long-term performance. With a dividend yield of 3%, the company is one of the UK dividend shares I think may also offer capital growth potential. Third-quarter results on 26 October could trigger investors to rerate Reckitt shares.

Should you buy M&G now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Christopher Ruane owns shares in British American Tobacco. The Motley Fool UK has recommended British American Tobacco, National Grid, and Reckitt plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

3 high-yield dividend shares to consider buying for a retirement portfolio

Dividend shares can provide retirees with regular passive income in their golden years. Our writer picks out three with yields…

Read more »

Investing Articles

Tesla stock has halved. Could it now double – or halve again?

After a wild few months for Tesla stock, Christopher Ruane weighs some pros and cons of the investment case. Could…

Read more »

Investing Articles

Does it make sense to start buying shares as the stock market wobbles?

Does a rocky stock market make for a good or bad time to start buying shares? This writer reckons it…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

£15k of passive income a year? It’s possible with the right dividend strategy!

To figure out how much dividends are needed for a lucrative passive income stream, investors must understand which strategies get…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

As US markets wobble, I’m listening to Warren Buffett!

The long career of billionaire investor Warren Buffett has included plenty of market turbulence. Here's what our writer's learnt from…

Read more »

UK money in a Jar on a background
Investing Articles

5 shares yielding over 5% to consider for a SIPP

Christopher Ruane introduces a handful of FTSE 100 and FTSE 250 shares he thinks an income-focussed SIPP investor should consider.

Read more »

Investing Articles

Here’s how an investor could invest a £20k ISA to target £1,500 of passive income per year

Can a £20,000 ISA throw off close to £30 per week on average of passive income when invested in blue-chip…

Read more »

Investing Articles

As gold hits $3,000, this FTSE 100 stock is primed for blast off

As Western institutions scramble to get as much gold as they can lay their hands on, Andrew Mackie believes this…

Read more »