Best UK Dividend Stocks to Consider Buying in December

Every month we ask our freelance writers to share their best ideas dividend stocks with you — this is what they said for December!

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Diageo

What it does: Diageo sells some of the world’s most popular alcoholic drinks, including Guinness, Baileys And Smirnoff.

By means of Royston Wild. Drinks giant Diageo (LSE:DGE) doesn’t have the greatest dividend yield out there. For this financial year (until June 2025) it is a healthy, if unspectacular, 3.7%.

This corresponds approximately to the FTSE 100 average.

However, the Captain Morgan maker is still a dividend legend and has increased its annual dividend for over 25 years. And I think it’s a top priority to consider after the new weakness in stock prices.

Diageo’s share price has fallen by more than 10% in the past month. And so it’s down 17% since the beginning of 2024.

Beverage-related spending has disappointed much of the industry recently. For Diageo, conditions in Latin America and the Caribbean have been particularly tough.

However, the Footsie company has a knack for recovering from such problems. And I am confident it will repeat this trick, supported by its large brand base, its expertise in innovation and its exposure to fast-growing emerging markets.

Royston Wild owns shares in Diageo.

M&G

What it does: M&G is a UK-based asset manager with a private and institutional client base across several global markets

By means of Christopher Ruane. The past six months have been bad for the M&G (LSE: MNG) share price. After reaching almost £2.40 in March, the price subsequently fell and has recently hovered around £2, 11% lower than where it started the year.

But a lower share price equals a higher dividend yield. An increase in the recent interim dividend also helped. At 1.5% it was modest. But management is achieving its goal of maintaining or increasing per-share payout every year.

All together that means the FTSE 100 financial services provider now offers shareholders a return of 9.9%.

Such a high return could indicate nervousness at City. In the first half, customers raised more money than they put in (excluding the company’s own). Heritage company). If this continues – for example due to fears about market performance – M&G’s profits could fall.

However, as a long-term investor, I like the company’s strong brand, large customer base and proven cash generation potential.

Christopher Ruane owns shares in M&G.

Primary health properties

What it does: A real estate investment trust (REIT) specializing in the ownership and management of healthcare facilities.

By means of Mark David Hartley. Like many stocks Primary health properties (LSE: PHP) suffered short-term losses due to the tax-heavy autumn budget. Shares fell 6% in October, erasing a summer of gains. Yet dividends remain consistent, with the 7.8% yield rewarding loyal shareholders. As a REIT, it is required to pay out 90% of taxable income as dividends, which often guarantees a solid dividend track record. That makes it an excellent option for an income portfolio with a long-term view.

The trade-off is that if the REIT funnels most of its pre-tax profits into business development, the dividend payout ratio may be low. This can happen during difficult economic periods when the real estate sector is often struggling. During periods of high inflation, limited real estate investments can suppress demand and damage share prices, as became clear during the corona crisis. Still, as part of a long-term portfolio to earn consistent dividend income, I think it is one of the most reliable REITs in the world. FTSE250.

Mark David Hartley owns shares in Primary Health Properties.

Supermarket Income REIT

What it does: Supermarket Income REIT invests in diversified supermarket real estate in the UK.

By means of Alan Oscroft. The Supermarket Income REIT (LSE: SUPR) The share price has plummeted in recent years, causing the expected dividend yield to rise to 8.8%. Forecasts show that the dividend will grow in the coming years, albeit slowly.

The pain of inflation and weakness in the real estate market have turned investors away from confidence. But we see a net asset value per share of about 89 cents, so the shares are at a discount to that.

At the annual results in September, chairman Nick Hewson said that the board “aimed at delivering a progressive dividend for shareholders.“

The dividend money ultimately comes from food sales, and that has to be as defensive a company as possible.

The company does have net debt, which could put pressure on future dividends. And persistent inflation could lead to more stock price volatility in the short term.

But I can’t imagine the combination of food and real estate rentals being anything other than a long-term cash cow.

Alan Oscroft has no position in Supermarket Income REIT

Taylor Wimpey

What it does: Taylor Wimpey, listed on the FTSE 100, is one of Britain’s largest housebuilders.

By means of Paul Summers. Taylor Wimpey (LSE: TW.) shares have fallen in recent weeks. This is despite the fact that the company claims that it “steady signs of improvement in customer demand” during the second half of the year to date.

The catalyst appears to be fears of a rebound in inflation caused by the government’s spending plans. The latter is thought to be so large that the Bank of England may be forced to slow the pace of rate cuts in 2025.

Such a move would be far from ideal for the housing market. On the other hand, I think a lot of this is now priced in and new investors are being offered an attractive entry point.

Taylor Wimpey’s dividend yield is also well over 7% (as I type). Yes, there is a risk this will decline as trading weakens. But what’s left may still be more than I would get elsewhere in the world FTSE 100.

Paul Summers has no position in Taylor Wimpey