1 of the UK’s top dividend stocks at a bargain price

The best dividend stocks offer cash returns to investors that can grow over time. And one of the UKâs finest is Renew Holdings (LSE:RNWH).

Investors might not be familiar with the company, but itâs been a very reliable investment. Importantly â especially in todayâs stock market â its future prospects look good as well.

Infrastructure

Renew is a specialist in infrastructure maintenance. Itâs a firm that operators hire to do things like maintain railway tracks, repair water facilities, and upgrade electricity transmission lines.

There are a lot of good things about this industry. One is that investments are mandated by regulators, so companies donât have much choice about cutting back on their spending.

Likewise, a focus on ongoing repairs means the business doesnât depend on infrastructure expansion projects. The existing stuff needs to be maintained, regardless of expansion plans.

Barriers to entry are also reasonably high. Water infrastructure repairs arenât the kind of thing that a local plumber can do â it requires specialist knowledge and expertise.

Durable growth

As a result, Renew is a resilient company that tends to benefit from relatively reliable demand. And that translates into good things from an investment perspective.

Aside from 2020 â and we all know what happened then â the firm has increased its dividend per share each year over the last decade. And these are not just token increases — they’re 10% a year.

Thereâs something else though, thatâs equally important. That dividend growth hasn’t stopped the underlying business from making investments that have significantly increased its value.

Source: Fiscal.ai

Renew’s dividend has accounted for less than 10% of its free cash flows. And it’s been putting the cash it has retained to good use.Â

A series of acquisitions has both strengthened the companyâs competitive position and increased its book value. Over the last 10 years, shareholder equity has climbed more than tenfold.

So shareholders who bought the stock a decade ago have not only owned a business thatâs distributed cash. It’s also grown impressively.

Outlook

Renewâs resilience is impressive. And thatâs valuable in a stock market thatâs trying to work out which companies are going to be the casualties in the rise of artificial intelligence (AI).

No company however, is risk-free. Thereâs a lot about the business that isnât under the firmâs control and delays to things like rail investments can result in profit warnings.

Thatâs why the stock fell sharply at the start of 2025. And while itâs recovered a fair bit, I still think it looks like good value at a price-to-earnings (P/E) ratio of 16.

Ultimately, my view is that this is one of the UKâs most durable businesses. As a result, share price volatility might be an opportunity thatâs worth considering.

Under-the-radar

At first sight, Renew looks like a steady operation, but not a spectacular one. But the companyâs acquisition strategy means investors shouldnât overlook its growth credentials.

The stock’s on my list of businesses Iâm paying attention to. And while I havenât bought it yet, Iâm giving it some serious consideration at the moment.

The post 1 of the UK’s top dividend stocks at a bargain price appeared first on The Motley Fool UK.

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Stephen Wright has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.