2 UK dividend stocks I’d buy today

When it comes to dividend stocks, I like to prioritize shareholder income more than high yield.

And that’s because companies that can grow their dividends will often increase their profits, earnings, and cash flow as well. And that situation can cause stock prices to rise above shareholder earnings.

For example, I like to think from Box (LSE: COA), a manufacturer of yarn and industrial footwear components.

In November 2022, the company posted its third quarter trading update ie “In line with full year expectations”. Organic revenue was up 6% in the quarter and overall revenue was up 14% through the third quarter of the year.

We will find out more about our final progress with our full year report due on March 2nd. But City analysts have increased earnings for 2022 by more than 20%. And they expect an increase of more than 6% this year.

Sensitive cycle

However, the business experienced a decrease in income in the pandemic year 2020. And this shows its vulnerability to the effects of the economic cycle. But since then earnings have recovered as well. And I am optimistic that the company has the potential to grow even more in the coming year.

Meanwhile, with a share price of around 73p, the forward earnings multiple is close to 10.5 for 2023. And the anticipated dividend yield is around 2.8%.

But the dividend is expected to rise 19% in 2023. And the compound annual growth rate of the dividend is running at 20%. So, despite the risk, I see something interesting.

And I want to too Hikma Pharmaceuticals (LSE: HIK), a company dealing in generic, branded and unlicensed pharmaceutical products.

On November 3 last year, the director reported “Strong Momentum in Injectables and Branded”. However, the Generic category has faced challenges. The company has experienced “double digit” price erosion and “single digit” volume shrinkage in the US generics business. But directors reckon cost and efficiency improvements are helping to keep the business afloat “Healthy core surgery margins in the mid-teens”.

overall growth in earnings

Meanwhile, City analysts expect overall earnings to rise by around 13% this year. And my hope is that it will grow even more in the coming year. Although there is a risk that the problem with the company’s Generic category may increase. And there is also a pile of debt to watch out for with this company.

However, I would be tempted to buy some shares now and collect dividends while I wait for further operational progress. And with the share price close to 1,699p, the forward yield for 2023 runs close to 2.8%. It is not the highest result in the world. But the compound annual growth rate of dividends has been running close to 11%. And that strikes me as potentially worth having in the portfolio.