It’s no secret that the UK market is a wonderful place to go hunting for dividend stocks. That said, it’s no surprise that many investors stick to buying the usual suspects from the FTSE 100. Think oil giant BP, British American Tobacco and financial services firm Legal & General.
Today (21 July), I’m taking a closer look at an alternative from lower down the food chain that has just released its latest set of half-year numbers.
Record revenue
I doubt MONY Group (LSE: MONY) is a name on most passive income seekers’ lips. But I bet they’d recognise its main brands.
This morning, the owner of Moneysupermarket.com and MoneySavingExpert.com revealed a 6% rise in like-for-like revenue for the first half of its financial year. The £227.1m achieved was a record for this period.
Thanks in part to cost-cutting measures, adjusted earnings also came in 3% higher than the previous year (£75.5m).
Under the bonnet, the company’s Insurance division seems to be performing better. Revenue here rose 4%. Elsewhere, SuperSaveClub memberships rose above 2.5m and delivered almost a fifth of group revenue.
Looking ahead, the mid-cap company expects to deliver full-year adjusted earnings in line with the current consensus.
Monster dividend stock
Despite this fairly positive update, the market doesn’t seem particularly impressed. The price was down 5% in early trading.
I suspect most of this is down to the lack of significant growth. This is something that has dogged the company for a while, despite efforts to expand its services.
On the other hand, at least two big attractions remain.
One of these is the dividend yield. Based on analyst projections for 2026, the shares offered 6.4% before the market opened. For comparison, the FTSE 250 yields 3.1%. In other words, new holders would be in line to generate over double the income of the index. While this income can never be guaranteed, it does look like it will be sufficiently covered by expected profit. The total dividend has been increasing in recent years too, helping to offset the impact of inflation.
Separately, a forecast price-to-earnings (P/E) ratio of 10 is low relative to the UK market as a whole. It’s even lower within the technology sector (if we assume that is where this company sits). Then again, a lot of this might be down to concerns surrounding AI and the idea that more people will simply bypass comparison sites in time. It’s worth remembering that a ‘cheap’ stock can always get cheaper.
Still, MONY shares have outperformed both the FTSE 100 and FTSE 250 so far this year. This is despite a couple of heavy falls along the way.
What’s my verdict?
Taking the above into account, I reckon MONY Group has enough going for it to suggest the £1bn cap should be considered for inclusion in a diversified portfolio. Sky-high scores on quality metrics, established brands, and a fairly robust-looking balance sheet make me optimistic that dividends aren’t in danger of being slashed, at least for now.
At the same time, the level of competition the company faces pushes me to think that certain other dividend stocks may deserve a higher spot on an income seeker’s watchlist.
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Paul Summers has no position in any of the shares mentioned
