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Despite the uncertain economic landscape, I’m backing the UK to remain a great place to go shopping for dividend shares. The London stock market is chock-full of companies with market-leading positions and strong balance sheets in mature industries. This could result in another bountiful year for passive income investors.
Indeed, the outlook for British stocks is strengthening follow a better-than-expected first quarter dividend. Excluding special dividends, shareholder payouts were basically stable year on year in the three months to March, at £13.6bn. That’s according to data from Computershare.
As a result, full-year underlying dividend growth is now tipped at 1.8% by Computershare, to £85.6bn. This is up from an estimate of 1% at the start of 2025.
A top UK dividend share
Of course it’s important to remember that dividends are never guaranteed. And as we’ve seen in the past, many UK shares could be set to slash, cancel, or postpone cash rewards if macroeconomic conditions worsen.
Yet there are still plenty of solid dividend shares to consider. Braemar Shipping Services (LSE:BMS) is one such stock I think demands a close look.
The annual dividend here is tipped to rise 6.3% in the current financial year (to February 2026). Based on Computershare’s predictions, this suggests cash rewards will rise far more sharply than the UK average.
As a consequence, the forward dividend yield on Braemar shares is a healthy 6.5%.
If broker forecasts are correct, a £20,000 lump sum invested in this dividend hero will provide £1,300 this year alone.
Robust forecasts
Braemar Shipping Services may not be for the faint of heart, though. Its markets are highly cyclical and face growing uncertainty as new trade tariffs come into effect. In March, the company cut revenues and profits forecasts for last year due to weak charter rates.
This has had a negative impact on the share price. But as broker projections show, it’s not expected to impact Braemar’s ability to keep paying large and growing dividends. I have to say that I’m not surprised.
This year’s predicted payout is covered 1.9 times by expected earnings, roughly in line with the widely regarded safety benchmark of 2 times. The shipbroker also has strong foundations, with net cash on the balance sheet at the start of the new financial year.
I’m also encouraged by Braemar’s strong forward order book, which reflects its diversified revenue streams and market-leading positions. The business recorded forward orders of $82.9m at the close of fiscal 2025.
This was up from $80.6m at the halfway point of last year.
Rough seas
Braemar is the second-largest shipbroker on the planet. And while it faces choppy waters in the near term, it still has significant long-term opportunities to exploit as the global economy steadily expands.
I also think it offers extremely attractive value following recent price weakness. As well as carrying that 6%-plus dividend yield, Braemar shares also trade on a rock-bottom price-to-earnings (P/E) ratio of 7.8 times.
On balance, I think it’s a top dividend share for risk-tolerant investors to consider.
