City of London Investment Group and two other big dividend stocks to consider

In a dynamic environment where the FTSE 100 is showing promising signs of growth and political changes are hinting at potential economic changes, investors are closely watching market trends and indices. In such a changing environment, selecting solid dividend stocks could be a prudent strategy for those looking to stabilise their portfolios with regular income streams.

Top 10 Dividend Stocks in the UK

Name	Dividend yield	Dividend Rating
James Latham (AIM:LTHM)	6.30%	★★★★★★
Impax Asset Management Group (AIM: IPX)	7.00%	★★★★★☆
Epwin Group (AIM:EPWN)	5.75%	★★★★★☆
Big Yellow Group (LSE:BYG)	3.92%	★★★★★☆
Keller Group (LSE:KLR)	3.48%	★★★★★☆
Plus500 (LSE:PLUS)	5.70%	★★★★★☆
Grafton Group (LSE: GFTU)	3.83%	★★★★★☆
Rio Tinto Group (LSE: RIO)	6.17%	★★★★★☆
Hargreaves Services (AIM:HSP)	6.82%	★★★★★☆
NWF Group (AIM:NWF)	4.52%	★★★★★☆

Click here to see the full list of 56 stocks in our Best Dividend Stocks Analysis tool.

Below we present you with a selection of stocks filtered by our screen.

Simply Wall St Dividend Rating: ★★★★☆☆

Preview: City of London Investment Group PLC is a public investment manager with a market capitalisation of approximately £184.80 million.

Operations: City of London Investment Group PLC generates its revenue primarily through asset management, contributing approximately $73.72 million.

Dividend yield: 8.5%

City of London Investment Group offers a high dividend yield of 8.45%, putting it in the top 25% of dividend payers in the UK. Despite this, its dividend is not well supported, with a payout ratio of 112.5% ​​and clear coverage issues from both an earnings and cash flow perspective. The company’s earnings have grown by 6.1% over the past year and are forecast to grow by 17.4% per year, but its dividend history shows volatility without consistent growth over the past decade. It currently trades at a significant discount to estimated fair value, suggesting potential undervaluation relative to its peers.

Simply Wall St Dividend Rating: ★★★★☆☆

Preview: Man Group Limited is a public investment manager with a market capitalisation of approximately £2.87 billion.

Operations: Man Group Limited generates its revenue primarily from its investment management business, which reported a profit of $1.17 billion.

Dividend yield: 5.1%

Man Group’s dividend yield of 5.13% is modest compared to leading UK dividend stocks, but the company has shown growth potential over the past decade. Currently trading at 57.4% below its estimated fair value, the stock offers upside potential with analysts forecasting a 22% price increase. Dividends are well supported with an earnings payout ratio of 82% and a cash flow payout ratio of 61.9%. However, dividends have been volatile and Man Group’s profit margins have declined to 20% from 35.1% last year. Recent strategic appointments suggest a strengthening of governance and risk management capabilities.

Simply Wall St Dividend Rating: ★★★★☆☆

Preview: IG Group Holdings plc is a fintech company operating globally in the online trading sector, with a market capitalisation of approximately £3.10 billion.

Operations: IG Group Holdings generates its revenue primarily from its brokerage segment, which amounts to £954.70 million.

Dividend yield: 5.4%

IG Group Holdings offers a dividend yield of 5.44%, slightly below the top quartile of UK dividend stocks. Despite consistent dividends over the past decade, their sustainability is questionable as they are not well covered by cash flow, with a high cash payout ratio of 152.4%. The stock is currently undervalued, trading 56.5% below its estimated fair value, indicating upside potential. The recent board reinforcement with Marieke Flament could bring new strategic insights to strengthen future performance.

Next steps

• Click this link to take a closer look at the 56 companies on our Top Dividend Stocks screen.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to constitute financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. Our goal is to provide you with focused, long-term analysis based on fundamental data. Please note that our analysis may not factor in the latest price-sensitive company announcements or qualitative information. Simply Wall St has no position in any of the stocks mentioned.

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