2 overlooked UK shares to consider for dividends
It’s only natural that investors should gravitate to the biggest UK shares for their dividend fix. These giants generate substantial free cash flow year after year — some of which can then be distributed to their owners every six months or so.
But I can see at least two mid-caps currently offering index-beating yields that deserve a bit more attention than they get and are worth considering.
On the up
MONY Group (LSE: MONY) is, admittedly, a biased pick. I’ve held shares in the price comparison platform provider for a few years and collected a lot of dividends in the process.
Fortunately for me (and any prospective investor), this looks set to continue. At its Annual General Meeting in May, the company said that it had delivered a “modest increase in revenue” since the start of 2025 relative to an “exceptionally strong comparative period in 2024“. Home Services was the standout performer thanks to more promotional deals being offered by energy suppliers.
With full-year guidance maintained, investors seem pretty happy. Indeed, the share price is up 17% or so in the last six months. And yet the valuation remains undemanding. We’re talking about a price-to-earnings (P/E) ratio of just over 12.
Chunky yield
But it’s the passive income stream that keeps me here. The forecast dividend yield stands at 5.9% — nearly double the average in the FTSE 250.
Naturally, this doesn’t come without risk. Some divisions — such as Travel — can be impacted by declines in discretionary spending. There’s also a sense that MONY will never knock it out of the park in terms of growth, partly due to operating in a very crowded market.
Still, margins and returns on capital remain high compared to most UK shares. There’s also little debt on the balance sheet.
Interim numbers are due on 21 July. If the shares dip in response, I’ll be disappointed. But in the absence of (very) bad news, another dividend payment should hit my account in September.
Dividend growth star
Another option that gets overlooked is wealth manager Rathbones (LSE: RAT). Perhaps this is due to it being in a space that isn’t known for offering a smooth ride in times of economic strife. Supporting this, the share price has been up and down like a yo-yo in the last five years.
On a more positive note, Rathbones has demonstrated the sort of reliability that most income seekers crave, namely year after year of hikes to the bi-annual payouts.
Analysts believe this will be the case again in 2025 with a total dividend of 99p per share. This would represent a 7% uplift on 2024 and equates to a tasty forecast dividend yield of 5.5%.
No sure thing
This is not to say that this or any future cash handout is ever guaranteed. The £2bn cap suffered a concerning 4.7% decline in funds under management in Q1 as clients (rightly) became nervous about the potential effect of Donald Trump’s planned ‘Liberation Day’ tariffs.
In response, Rathbones has sought to manage costs to mitigate any damage to its bottom line. This seems to have reassured investors for now with the stock easily outperforming the index.
Half-year numbers drop on 30 July but a P/E of 11 already offers what might be considered a good margin of safety.
The post 2 overlooked UK shares to consider for dividends appeared first on The Motley Fool UK.
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Paul Summers owns shares in Mony Group Plc. The Motley Fool UK has recommended Mony Group Plc and Rathbones Group 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.
