Here, I’m going to highlight two UK dividend shares I like the look of right now. Both of these stocks currently have yields of over 3%, and I think they could play a valuable role in my portfolio when I next hit the buy button.

One of the safest dividend shares in the FTSE 100?

Let’s start with defence and security company BAE Systems (LSE: BA), which is a member of the FTSE 100 index.

There are several reasons I’m bullish on BAE Systems. Firstly, the backdrop for the company is quite supportive given the high level of geopolitical uncertainty globally (Russia/Ukraine, China/Taiwan, etc). This year, the group expects to achieve sales growth of between 2-4% and earnings growth of 4-6%.

Secondly, brokers are lifting their earnings forecasts and share price targets. For example, analysts at Jefferies just raised their target price to 1,000p from 960p. This kind of activity should support the share price.

Third, the company is buying back its own shares. Recently, BAE announced a three-year share buyback programme for up to £1.5bn. This should boost earnings over time.

As for the dividend, analysts currently expect the FTSE 100 company to pay out 26.3p for 2022. At the current share price, that equates to a yield of a healthy 3.3%.

The big risk for the firm, to my mind, is that the Russia/Ukraine crisis comes to a sudden end. It’s something we all long for. But in this scenario, I’d expect defence stocks to experience some temporary share price weakness.

Overall, however, I think BAE Systems is a savvy pick for my portfolio right now. It’s worth noting that the stock’s forward-looking P/E ratio is about 15, so it’s not particularly expensive.

An under-the-radar dividend stock

The second dividend play I want to discuss is technology specialist Computacenter (LSE: CCC). This stock – which is part of the FTSE 250 – is a little more under the radar.

There’s a lot to like about this company, in my view. For starters, it looks set to benefit from one of the most dominant trends on the planet today – digital transformation. So there’s long-term growth potential here.

It’s also very profitable. Last year, Computacenter’s return on capital employed (ROCE) was 27%. Companies that generate high ROCE tend to be good investments over the long term because they have a lot of money to reinvest for growth.

Meanwhile, the dividend yield is attractive (currently around 3.5%) and dividends are well covered by earnings.

Finally, the valuation is very reasonable. Currently, the stock trades at just 12 times this year’s earnings forecast.

Of course, Computacenter is not perfect. Recently, the company has experienced some supply chain issues. These could persist in the near term.

All things considered however, I think the long-term risk/reward proposition here is very attractive.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

Begbies Traynor Group 

What it does: Begbies Traynor provides financial services for companies in distress. The firm is a specialist in corporate insolvency. 

By Royston Wild. The outlook for the UK economy is getting gloomier as inflation accelerates. National output shrank in March, latest data shows, and recessionary risks are rising. It means that counter-cyclical share Begbies Traynor Group (LSE: BEG) could be a top stock for me to buy this June. 

A mix of economic deterioration and the withdrawal of government furlough support is driving corporate insolvencies through the roof. The cash crunch facing British business looks set to intensify, too, as lending conditions get tougher.  

A study from the Federation of Small Businesses shows that banks are “pulling up the drawbridge” to firms seeking capital. Indeed, just 19% of companies surveyed described the availability of credit as “good” in quarter one. This was the lowest figure since 2016. 

In this climate I think demand for Begbies Traynor’s financial services could soar. City analysts think the stock’s earnings will rise 10% in the 12 months to April 2023. I believe this estimate could be revised upwards as the fiscal year progresses. 

Royston Wild does not own shares in Begbies Traynor Group. 

XP Power

What it does: XP Power is a designer and manufacturer of power converters for the global electronics industry.

By Zaven Boyrazian. With Covid-19 creating plenty of disruptions for manufacturing businesses like XP Power (LSE:XPP), it’s not surprising to see the stock suffer by nearly 40% over the last 12 months. However, these issues are ultimately short term. Meanwhile, demand for the group’s products continues to climb, especially from semiconductor manufacturing companies.

Looking at the latest quarterly results, revenue grew by a meagre 8%, courtesy of the aforementioned disruptions. But the order book stands at a record £260m. And with a new manufacturing facility now under construction, the firm’s order capacity is set to expand considerably over the next few years.

In my opinion, this places XP Power in a favourable position to secure long-term growth. And that’s why, alongside the accolade of being my preferred stock for June, the recent tumble in share price looks like a great buying opportunity for my portfolio today.

Zaven Boyrazian does not own shares in XP Power.

Aviva

What it does: Aviva is a UK company offering a range of insurance and wealth management services

By Alan Oscroft: Aviva (LSE:AV) has been restructuring itself for several years, disposing of non-core businesses and cutting costs. As a result of that, it has had the cash to return a total of £4.75bn to shareholders, directly and via share buyback. The company now plans to pay progressive dividends yielding better than 7% this year and next.

Aviva is not out of the woods yet, after recording an earnings fall in 2021. The financial sector is also facing an uncertain outlook in today’s economic climate. But Q1 figures in May showed solid progress.

On balance, I think Aviva has all but turned the corner. But I don’t think the share price has caught up yet. Now Aviva has all but completed its capital return, investors can focus on future of the restructured company.

I’m hoping June could be the start of a renewed bull run. I’m holding, and might even buy more.

Alan Oscroft owns shares in Aviva.

Tritax Big Box REIT

What it does: Tritax Big Box REIT is a real estate investment trust that owns a portfolio of logistics warehouses.

By Edward Sheldon, CFA. Tritax Big Box REIT (LSE: BBOX) shares pulled back in late April (after e-commerce giant Amazon announced that it has a surplus of warehouse space) and I believe this has created a buying opportunity.

One reason I’m bullish here is that in the company’s recent first-quarter results, management advised that demand for new logistics space remains “very strong” and that the group is well-placed to capitalise on the high level of demand through its development pipeline. It added that it is handling inflation through active management of open market rent reviews, along with inflation-linked leases.

Another reason is that since the share price has fallen, eight company insiders, including the Chairman, have stepped up to buy stock. This indicates that those within the company expect the share price to rebound.

Now, BBOX does have a relatively high valuation. This adds some risk. If future results are disappointing, the stock could underperform.

Overall, however, I believe the long-term risk/reward proposition here is attractive enough to name the stock as my favourite for June.

Edward Sheldon owns shares in Tritax Big Box REIT and Amazon

Games Workshop

What it does: Games Workshop designs and manufactures miniatures and games. It sells these through various retail channels.

By Stephen Wright. Games Workshop (LSE: GAW) is a stock that I’d very much like to own in my portfolio. The company has a loyal and committed customer base, with good intellectual property rights protecting its business. It also has a balance sheet that instils confidence in me, having more cash than debt.

The company is in an interesting place at the moment. I think that high inflation and rising interest rates are likely to put pressure on businesses in this sector. But Games Workshop’s unique product should, in my view, see them through.

At the stock level, I’ll be looking to exploit any weakness in June to start building out a position. I think it’s important to be disciplined about overpaying, but I think there could be an opportunity here to acquire a great business at a reasonable price.

Stephen Wright does not own shares in Games Workshop

Abrdn

What it does: Abrdn is a global investment management company, managing a wide range of assets for its clients. 

By Michelle Freeman. It may seem counter-intuitive to pick Abrdn (LSE:ABDN) as my top stock for June. After all, its core business model is its fee-based investment offerings, opposite to the Motley Fool line of thinking. 

But you see, it’s not difficult to make money in a long bull market. However, a good strategy is priceless when it comes to navigating choppier investment waters. That’s why I think the recent run of doom and gloom news on investment markets will see a lot of retail investors willing to pay a little more for investment advice. 

With the share price remaining down over 25% year-to-date, I see plenty of long-term upside potential. That’s backed up by a majority of analysts holding buy targets above today’s price. 

And when you throw in that very tasty +7% dividend yield, it makes it a whole lot easier to stay the course through the ongoing market volatility.

Michelle Freeman does not own shares in Abrdn.

Associated British Foods 

What it does: ABF is the owner of retailer Primark and four food production businesses in grocery, sugar, ingredients and agriculture 

By G A Chester. Associated British Foods (LSE: ABF) is out of favour with the market. Indeed, you have to go back almost a decade to find the share price as low as its current level. 

Primark suffered during the pandemic, but the group remained profitable thanks to its food businesses enjoying strong demand. Primark has since recovered well, and food sales have continued to grow. 

However, like a lot of companies, ABF is now seeing significant inflationary pressures in raw materials, supply chains and energy. These costs will negatively impact the group’s profit margins. Notwithstanding the headwinds, management’s outlook for the year is for “significant progress in adjusted operating profit and adjusted earnings per share.” 

There’s a risk management’s expectations could prove over-optimistic, because the economic backdrop is so uncertain. Nevertheless, with the share price and valuation at multi-year lows, I think I’m looking at a rare opportunity to buy into a high-quality enterprise. 

G A Chester does not own shares in Associated British Foods 

Games Workshop

What it does: Games Workshop designs, manufactures, and sells fantasy miniatures and related products

By Paul Summers. Rather than move into cheaper but inferior value stocks at a time when investor interest in them might be peaking, I think the current market volatility offers me a wonderful opportunity to buy some of the UK’s best growth stocks at knock-down prices. One example is Games Workshop (LSE: GAW). 

As I type, shares are down over 30% year-to-date and almost 45% off their 52-week high. This brings the price-to-earnings ratio down to 18 – mightily attractive considering the high margins and massive returns on capital Games usually posts.

Sure, spending on hobbies will likely be reduced as the cost of living gallops higher. However, I reckon the sheer popularity of its products and loyalty of its customers means business should recover strongly once the clouds have passed. 

So long as I’m prepared for hold for more than a few months, building a position in this stock in June could prove lucrative.

Paul Summers does not own shares in Games Workshop

Associated British Foods

What it does: Associated British Foods is a highly diversified business. It is the owner of a number of leading brands including: Primark, Silver Spoon and Kingsmill. It also produces a number of food ingredients including sugar beet and flour.

By Andrew Mackie. Associated British Foods (LSE:ABF)’s share price is now trading at levels not seen since the stock market crash of March 2020. Here’s why it’s my top stock for June.

However, to my mind, the business is in a lot stronger position than during Covid. Yes, Primark has been forced to raise prices on a number of autumn items due to rising input costs. But all its stores are trading and revenue growth remains strong. Its no-frills brand will likely resonate well amongst increasingly cost-conscious consumers, particularly in the run up to the holiday season.

But ABF is a lot more than just Primark. The business continues to invest heavily in its grocery brands. Twinings, for example, recently enhanced its offering in the lucrative wellbeing teas market.

I am also excited about its agriculture division which produces animal feeds for pig, poultry and dairy. As food security becomes an increasingly important consideration, yield sustainability and environmentally-friendly practices will favour innovative businesses such as ABF.

Andrew Mackie owns shares in Associated British Foods.

JD Sports Fashion

What it does: JD Sports Fashion is a retail chain specialising in sports, fashion and outdoors brands, with a large digital commerce footprint.

By Christopher Ruane. The retailer JD Sports Fashion (LSE: JD) is known for low prices — but lately that has been true for the company’s shares as well as its shoes.

Over the past 12 months the JD Sports share price has tumbled 35%. But I think that fall is overdone and see a buying opportunity for my portfolio. The company expects to report its annual results in June. I reckon that could lead investors to reconsider the share price.

JD has said that headline profits before tax and exceptional items for last year are expected to come in at £940m. It thinks that 2023 will be at least as good, although a worldwide shortage of certain types of footwear is one risk to revenues and profits. With a market capitalisation of £6.2bn, I think the company looks cheap given its strong performance and attractive business outlook, making it my top stock for June.

Christopher Ruane owns shares in JD Sports.

Anglo American

What it does: Anglo American is a mining firm operating across the globe. It mines diamonds and platinum group metals (PGMs), together with copper, iron ore, and nickel.

By Andrew Woods. Anglo American (LSE:AAL) posted bumper pre-tax profits in 2021 of $17.6bn, up from $5.4bn the previous year. The company has recently been benefiting from historically high metal prices. These higher prices have been largely caused by the reopening of economies after the pandemic. Furthermore, the situation in Ukraine has heightened supply concerns and the overall trend of rising metal prices could be here to stay for a while yet.

The firm also recently signed a memorandum of understanding with EDF Renewables. This will develop solutions to make Anglo American’s South Africa operations run on 100% renewable energy. This is part of an effort by the business to make its mining operations more environmentally friendly.

While iron ore production declined for the first three months of 2022, the diversity of Anglo American’s business may continue to allow it to reap the benefits of surging demand for base metals, not to mention rising revenue from growing diamond sales in the US. 

Andrew Woods does not own shares in Anglo American

Computacenter

What it does: Computacenter supplies IT hardware and services to large corporate and public sector organisations.

By Roland Head. FTSE 250 group Computacenter (LSE: CCC) has a long history of steady growth. Sales have doubled to £6.7bn since 2012, while Computacenter’s annual profit has tripled to £185m over the same period.

Demand surged through the pandemic due to work-from-home and ecommerce demand. Although growth has eased in 2022, Computacenter management still expect to report “a year of further progress”. This tells me that another increase in annual profits is expected.

The main risk I can see is that an economic slowdown in 2022/23 could hit demand and cause Computacenter to miss a year or two of growth. However, I think the company’s share price already reflects a cautious view.

Computacenter is highly profitable and ended last year with net cash of £95m. The stock’s forecast price/earnings ratio of 15 times is at the lower end of its historical range. I think the shares look decent value at this level.

Roland Head does not own shares in Computacenter.

Burberry

What it does: Burberry is a British luxury fashion brand that design and distributes ready-to-wear items. These include trench coats, leather goods, footwear, fashion accessories, eyewear, fragrances, and cosmetics.

By John Choong. Having seen a 15% decline this year, the Burberry (LSE:BRBY) share price could be on the verge of a rebound this summer. As a luxury brand, many of Burberry’s goods hedge against inflation. This was evident in its latest earnings results, as its profitability hit an eight-year high. The company makes the bulk of its revenue from China, and it’s been capitalising on the uptake in luxury consumer spending within the region. In fact, the British firm opened a flagship store in Shanghai recently.

Although I expect the next trading update to post bitter numbers as a result of the recent lockdown in Shanghai, I remain optimistic for the FTSE 100 firm’s long-term prospects. I believe that sales figures will rebound along with its share price once restrictions come to an end, and that a sour trading update for Q1 could present a buying opportunity for the stock in June.

John Choong does not own shares in Burberry.

Here, I’m going to highlight two top FTSE 250 shares I’d buy as we start March. Both of these companies have a lot of momentum right now, and I think they have the potential to be great long-term investments for me.

A top FTSE 250 stock

First up is Computacenter (LSE: CCC). It’s a leading independent technology company that helps businesses and government organisations across the world source, transform, and manage their IT infrastructure.

This FTSE 250 company appears to be ticking along quite nicely at present. In a trading update posted in late January, the company advised that it finished 2021 with a strong quarter that was ahead of its own expectations, and that revenue for the year was up 23%. Meanwhile, it also said that its product order backlog was at an all-time high and considerably larger than a year earlier. 

Looking ahead, I think CCC is well positioned to generate solid growth in the years ahead. That’s because all over the world, companies are undergoing digital transformation. There is the risk that growth could stall in the short term due to the fact that so many businesses brought forward tech spending during the pandemic. However, given that many businesses are yet to go digital, I think the long-term prospects here are attractive.

As for the stock’s valuation, it’s very reasonable, to my mind. At present, the forward-looking P/E ratio is about 18, which is not high given the company’s growth track record and prospects. At that valuation, I’m a buyer. A dividend yield of around 2.2% is a bonus.

A booming industry

The second FTSE 250 stock I want to highlight today is Tritax Big Box (LSE: BBOX). It’s a real estate investment company that owns a portfolio of large-scale logistics warehouses. These are rented out to retailers such as Amazon and Tesco.

A recent trading update from Tritax was very encouraging. The company advised that market fundamentals remain “strong”, with high occupier demand and “historically low levels” of available space. And it also said that it’s accelerating its development programme with significant development expected over the next 12 months. It believes its development portfolio has the potential to more than double contracted rent over the long term.

One issue to be aware of with BBOX is that the company sometimes raises capital from investors to fund its expansion plans. This can have a negative impact on the share price in the short term. Another risk is the stock’s P/E ratio of 30. This valuation doesn’t leave much room for error.

I’m comfortable with these risks, however, as I’m a long-term investor. The UK e-commerce industry set for strong growth over the next decade. So I think the long-term prospects here are very attractive. And with the stock offering a yield of around 3% right now, I see a lot of investment appeal. 

Darktrace

Recently demoted from the FTSE 100, cybersecurity specialist Darktrace (LSE: DARK) is first on my list of second-tier stocks to watch next month. It releases interim numbers on 3 March. 

The former market darling has now given up most of the gains it made since becoming a listed company. That’s a quite shocking reversal considering just how important cybersecurity already is and the potential growth that lies ahead. Darktrace’s undoubtedly impressive self-learning AI can be applied to multiple industries too.

Then again, I do understand why sentiment has changed. As good as Darktrace’s tech appears to be, there can be no doubt that it’s operating in a highly competitive space. Brokers also remain concerned by the company’s low level of R&D spending.

Unfortunately, the valuation of almost 11 times sales still looks rich to me as well. In fact, I wonder if the stock will fall further in March if traders continue to shun unprofitable growth stocks in favour of more traditional value plays. 

I still can’t bring myself to get involved just yet.

Greggs

The advent of higher prices at food-on-the-go retailer Greggs (LSE: GRG) makes its next update an essential read in my opinion. The sausage roll seller reports final results on 8 March.

Shares in Greggs have tumbled almost 25% in 2022 so far. Is the actual business 25% less valuable though? As a holder, I won’t be surprising anyone when I say that I don’t think it is. Yes, the departure of long-standing CEO Roger Whiteside isn’t ideal. And, no, the spread of the Omicron variant late last year can’t have helped trading.

But these are temporary setbacks. Helped by its strong brand and marketing savvy, I have no doubt Greggs can deal with pretty much anything that comes its way. I also doubt its loyal fanbase will resent a 5p price hike for long.

At less than 21 times forecast earnings, Greggs still isn’t cheap as chips to acquire. However, the price is far more palatable than it once was. Since I plan to keep the stock in my portfolio for years rather than weeks, I’d have no issue increasing my holding next month.

Computacenter

A final FTSE 250 member I’ll be watching is IT solutions provider Computacenter (LSE: CCC). While a 7% drop in the share price year-to-date is unfortunate, investors here have fared a lot better than other UK growth shares.

I can’t see full-year results on 16 March being anything less than solid. Back in January, Computacenter reported that recent trading had been ahead of expectations despite supply chain headwinds.

The question I’m asking now, however, is how much of this is already factored into the valuation. The fact that Computacenter’s share price didn’t move higher after its last update suggests quite a bit. Perhaps investors are getting concerned about just how thin margins are at the Hatfield-based business?

On the flip side, its shares currently change hands for 17 times earnings. That’s cheap compared to peers in the industry. There’s also a 2.2% dividend yield, easily covered by forecast profits.

For now, the company stays on my watchlist.

The improving situation is reflected in the share price. At 426p, it’s risen by just over 40% in the past year. But there could be more to come over an extended period.

Big in the growth area of nickel

One growth area within the firm’s operations is its well-established nickel business. The company has been optimising its nickel infrastructure for decades. And the complexity of the operation suggests to me there could be high barriers to entry for would-be competitors.

Meanwhile, around 70% of nickel production goes to making stainless steel. But there’s a growing demand for nickel in the electric vehicle (EV) industry and other sectors. Indeed, it’s the most important metal by mass in the lithium-ion battery cathodes used by EV manufacturers.

And the metal’s wide useage may not be surprising when we consider its properties. For example, nickel can be disinfected, it’s corrosion resistant, it’s strong at high and low temperatures, and it has excellent electrical and magnetic properties.

Glencore reckons nickel is everywhere in the modern world but we rarely know it. So it has a reputation as being a ‘hidden’ metal. But one of the important factors for Glencore is there’s “virtually no other metal that will do the same job as nickel”.

Another feature of the nickel industry is that recyling obsolete kit produces more useable nickel. And Glencore is ready to benefit from that angle of the industry as demand grows in the years ahead.

However, the commodity industry is known for its cyclicality and that adds risks for Glencore shareholders now. But the company’s forward-looking dividend yield is running above 6% for 2023. And that valuation tempts me, despite the uncertainties.

Well placed for long-term growth

I’m also keen on the long record of multi-year growth delivered by Computacenter (LSE: CCC). The company describes itself as an independent technology partner. And that means it provides structured solutions and resources for large corporate and public sector customers. Computacenter helps them select, deploy, and integrate digital technology to achieve their business goals. And, day to day, Computacenter maintains, supports, and manages information technology (IT) infrastructure and operations for its customers.

I’ve been impressed how the business has maintained its growth trajectory over many years. And that suggests to me the company is well placed in its markets. Indeed, January’s trading update and outlook statement is upbeat. And the firm said its product order backlog is at “an all-time high and considerably larger than a year ago.”

Meanwhile, City analysts expect earnings to come in essentially flat this year and the share price has been consolidating. I’m inclined to use the pause in momentum to buy some of the shares to hold for the long term.

There are no guarantees of a positive investment outcome, of course, because past performance is not always a good guide to the future. And with the share price near 2,746p, the forward-looking P/E ratio is just below 18 for 2022, which isn’t a bargain-basement valuation.

Nevertherless, I see this as a quality enterprise and would be willing to take on the risks of share ownership.

It’s a good business. And the firm said in today’s pre-close trading update it expects earnings for 2021 to come in ahead of the directors’ previous expectations after a strong fourth quarter. 2021 will now be the 17th year of uninterrupted growth in earnings per share. And that’s “in spite of headwinds from a strong pound and product supply shortages.”

A decent outcome for investors so far

And that long record of growth has worked wonders for the share price. At 2,680p, the stock is up by around 11% over the past year. But over five years, it’s around 240% higher. But on top of that capital growth, shareholders have enjoyed a stream of dividends. And the shareholder payment has been running at a compound annual growth rate close to 19% over the past few years.

If I had to sum up the appeal of this business to me in one word, it would be ‘consistency’. And for that reason, I’d want Computacenter to be a core holding in my portfolio now. But is the valuation right? And to answer my own question I’d say with its forward-l00king P/E rating running just above 17 for 2022, looks fair rather than cheap. But it’s not wildly expensive either if the business can maintain its gentle growth trajectory in the years ahead.

City analysts have pencilled in an essentially flat performance for earnings in 2022. So there don’t seem to be any immediate prospects for growth. But I’ve learned not to underestimate Computacenter’s apparent ability to keep grinding forward with progress. So, I’d expect a decent growth outcome from the business over, say, five years and more into the future.

In 2021, revenue grew by 23% including contributions from acquisitions made since the beginning of 2020.

A positive outlook

Looking ahead, the directors are optimistic for 2022 based on the “robustness of the business” through 2021 and the particular strength of the fourth quarter.  Meanwhile, the product order backlog is “at an all-time high and considerably larger than a year ago”. The directors reckon the situation arose because of product supply constraints leading to customers ordering earlier. However, they also said there is “significant” underlying strength in the market.

Computacenter went into 2022 with operations “growing in multiple geographies” and the directors think the business is “well placed” for another year of progress. But, of course, past performance is no guarantee of a good outcome in the future. And on top of that, the wider stock market has been showing weakness lately.

It’s possible that I could buy the stock now and see it decline if the market decides to re-rate the company’s valuation lower.

Nevertheless, I’m keen on CCC as a long-term hold and would likely be even keener if the share price declines from where it is now. Computacenter is a top stock for me to hold for 2022 and beyond.

Christopher Ruane: Lookers

Second-hand car sales dealerships aren’t always the best place to look for a bargain. But I think things could be different at Lookers (LSE: LOOK), which sells used and new vehicles.

Several directors have added to their holdings in December. The chief executive spent £29,000 doubling his own position. I think such confidence may be merited. The Lookers share price has been treading water even though third-quarter results beat expectations. Supply issues could hurt new car sales, though, threatening revenues.

Christopher Ruane does not own shares in Lookers.

Rupert Hargreaves: Next

My top share for January is the retailer Next (LSE: NXT). I would buy this stock for my portfolio as it is a retail champion. It has consistently outperformed the rest of the UK retail industry and its own expectations in the past, and the firm is not slowing down.

Management is investing heavily to maintain the group’s growth rate. As the UK economy continues to recover, I think Next could prosper. Risks that could hold back growth include wage inflation and the supply chain crisis.

Rupert Hargreaves does not own shares in Next.

Niki Jerath: Reckitt

My stock pick for January 2022 is Reckitt (LSE: RKT). The share price is up over 2% in the past month. I could be wrong, but it might go higher.  

I expect demand for its consumer goods brands will rise over Christmas and into the New Year, no matter what happens over the festive period.  

Sales of cleaning brands such as Dettol are sure to rise in reaction to the unfortunate outbreak of the Omicron Covid variant.  

I’m also confident that its other brands such as Strepsils and Nurofen will be useful in January as we nurse our New Year’s hangovers!  

Niki Jerath does not own shares in Reckitt.

Dylan Hood: Lloyds

My best share for January is Lloyds (LSE: LLOY). At the time of writing, Lloyds shares are trading at 46p. The stock has performed well for investors throughout 2021, delivering 33% year-to-date returns.

The main reason I like the look of Lloyds is because of its high growth plans under new chief, Charlie Nunn. The new strategy aims to vastly speed up growth in areas of the business such as property, wealth management, and commercial banking.

If this plan pays off, I think we could see some great growth in the Lloyds share price throughout January 2022 and beyond.

Dylan Hood does not own shares in Lloyds.

Stephen Bhasera: Liontrust Asset Management

Liontrust Asset Management (LSE:LIO) is arguably the best asset management company listed on the London Stock Exchange right now. The results speak for themselves as its share price has appreciated by 58% over the past year.

This company employs several strategies across multiple funds to produce superior returns for investors. With over £30bn in assets under management, its latest half-yearly results revealed revenues of £109m. Forecasts indicate that Liontrust’s growth will be slightly slower in 2022 than the past five years but it is still expected to drastically outperform competitors and so remains a solid pick.

Stephen Bhasera has no position in Liontrust.

Edward Sheldon: Hargreaves Lansdown

My top stock for January is Hargreaves Lansdown (LSE: HL), which operates the UK’s largest investment platform. It underperformed in 2021 and I think the share price weakness has created an attractive buying opportunity.  

There are several reasons I like HL. In the short term, the company looks set to benefit from higher interest rates. That’s because it earns income on its clients’ cash savings. Meanwhile, in the long run, it should benefit as equity markets continue to rise and more Britons save and invest for retirement. It’s worth noting that portfolio manager Nick Train believes that Hargreaves Lansdown represents “one of the greatest UK growth stock bargains over the next decade.”

There are risks to consider here, of course. One is competition from rivals such as AJ Bell (which just launched a new commission-free app) and Freetrade.

Overall, however, I think this FTSE 100 stock looks attractive right now.

Edward Sheldon owns shares in Hargreaves Lansdown.

Andy Ross: Staffline 

Shares in blue collar recruiter Staffline (LSE: STAF) have struggled for much of the last quarter of 2021, after hitting a high point in mid-September. On the flipside, that has made the valuation pretty compelling with a forward P/E ratio of 14. The EV to EBITDA ratio – another measure of valuation – is 7.77, which is low and indicates the shares are potentially undervalued.  

Staffline is a recovery share. It has new executives in place who are looking to build back better after a share price collapse in recent years, following poor leadership under previous management.  

Andy Ross owns shares in Staffline.

Zaven Boyrazian: Focusrite

Focusrite (LSE:TUNE) provides the music industry with bleeding-edge audio equipment and software. Under its numerous brands, the firm can cater to professionals and hobbyists alike.

The group definitely operates in a niche market with plenty of competitors targeting the same audience. However, thanks to some smart bolt-on acquisitions, and an impressive Net Promoter Score of 74, the company seems to be staying on top.

With double-digit revenue and earnings growth even with live events being delayed, Focusrite looks primed to deliver impressive returns, in my opinion.

Zaven Boyrazian does not own shares in Focusrite.

Paul Summers: Computacenter

I think there could be further upside to the Computacenter (LSE: CCC) share price in 2022. The company has thrived in recent years as corporate and public sector organisations have rushed to update their IT infrastructure. With no end to Covid-19 in sight, I can’t see this momentum slowing just yet.

Clearly, much depends on whether product supply shortages highlighted in October have worsened. We’ll find out in January’s trading update. At 18 times forecast earnings, however, Computacenter’s valuation doesn’t seem excessive given its consistently great returns on capital. There’s a secure 2.2% dividend yield too.

Paul Summers has no position in Computacenter

Roland Head: Morgan Advanced Materials

My top stock for January is Morgan Advanced Materials (LSE: MGAM). This British industrial firm has been making equipment for metal foundries and parts for electric motors (among other things) since the late 19th century.

Growing demand from electric transport and renewable energy is helping to drive new growth. Although there’s always the risk that an economic slump will hit demand, I believe Morgan’s long pedigree and market share should provide some protection for shareholders.

Recent management guidance is positive. I think the shares look good value on 12 times forecast earnings and would consider buying them for my portfolio.

Roland Head does not own shares in Morgan Advanced Materials.

G A Chester: British American Tobacco 

British American Tobacco (LSE: BATS) is a highly cash-generative business, and unhealthy products and regulatory risk aren’t deal-breakers for me. 

It’s my choice for  for January after its recent trading update. It’s making excellent progress on its £5bn revenue target for new category products. It’s also delivered £1bn cost savings one year ahead of plan. Lower debt gives it greater capital allocation flexibility going into 2022, and management said: “We recognise the clear value of a share buyback at the current valuation.” 

In addition to a running dividend yield of around 8%, I’m expecting the company to announce a buyback programme with its annual results on 11 February. 

G A Chester has no position in British American Tobacco.

Royston Wild: National Grid 

I think grabbing some defensive stodge could be a good idea for January. As I type, Covid-19 restrictions are being tightened Omicron infection rates balloon. It’s been suggested that full lockdowns could return after Christmas too. 

The economic implications of these measures for many UK shares could prove catastrophic. But the public health emergency isn’t something FTSE 100 stock National Grid doesn’t have to worry much about. It’ll be needed to keep Britain’s electricity network running regardless of how the pandemic is panning out. This is why I think it could be a top stock for today.

Oh, and at recent prices National Grid offers jumbo dividend yields just shy of 5% for the short-to-medium term. 

Royston Wild does not own shares in National Grid.

IT services provider on the up

Computacenter is one of Europe’s leading providers of IT infrastructure services. It helps businesses operate and reach their full potential through the use of IT and technology. With a presence in Europe, North America, Asia, and Africa, Computacenter is a global firm.

Technology has evolved exponentially in the past decade or so. Computacenter has continued its impressive growth journey by staying in touch with the latest developments and providing the best solutions for its vast customer base.

As I write, shares in Computacenter are trading for 2,672p per share. A year ago, shares were trading for 2,330p which is a 14% return in 12 months. Most of the best stocks to buy now have offered a positive return in the past 12 months. In fact, Computacenter shares have surpassed pre-pandemic highs of 1,920p by some distance.

Why I like Computacenter

1. Computacenter has an excellent track record of performance historically and recently. I understand that past performance is not a guarantee of the future but I use it as a gauge nevertheless. Looking back, I can see that Computacenter has recorded a year-on-year increase in revenue and gross profit for the past four years. This includes while trading during the pandemic, which did not affect it. A recent Q3 trading update for the quarter ending 30 September also saw trading recorded as “ahead of expectations.”
2. Most of my best stocks to buy now make me a passive income. Computacenter is no different. Currently, it has a dividend yield of over 2%. 
3. Computacenter’s profile and reach across the world is impressive. With many locations strategically placed throughout the world, it has access to lots of markets which can only increase performance and in turn, its balance sheet. In addition, it is always on the lookout to open new locations and further its reach. It has a proven track record of consistently opening new locations in untapped markets.

Even the best stocks to buy now have risks

Computacenter has two main risks in my opinion. Firstly, the well-documented shortage in semiconductors will affect the supply chain of electronic products. Computacenter will be affected by this and it could affect performance. Next, competition in the IT services sector is rife. Many other firms are vying for market share and they are all vying for the same customers to sell their products and services too.

Overall I do believe Computacenter is one of the best stocks to buy now for my portfolio. It is well positioned to help businesses continue to achieve their digital transformation, which will boost its own growth and performance. It has a positive track record of performance and growth too.

I also believe Computacenter stock is cheap with a forward price-to-earnings ratio of just 17. In fact, UBS analysts last month predicted that the share price could go as high as 3,290p and have upgraded the stock to ‘buy.’

Here, I’m going to highlight two FTSE 250 dividend stocks I like the look of right now. I’d be happy to buy these stocks for my own portfolio today.

FTSE 250 dividend shares

The first stock I want to discuss is Workspace Group (LSE: WKP). It’s a real estate investment trust (REIT) that offers flexible office space solutions in London. Currently, it has over 60 workspaces and serves over 3,000 small businesses. The yield on the stock is around 2.5%.

There are two reasons I’m bullish on Workspace. The first is that the company is well positioned for the new ‘hybrid’ work environment. I’m convinced that the pandemic has changed the way we work forever. In my view, we’re likely to see a lot less mandatory nine-to-five working going forward, and a lot more flexibility in terms of hours. The upshot? Companies are likely to seek out flexible office space.

The second reason I’m bullish is that the London start-up scene is booming right now. According to Tech Nation, there were over 100,000 new businesses launched in the Capital last year. As start-ups get bigger, they require office space. I think Workspace is well placed to benefit from the London start-up boom.

There are risks to my investment thesis, of course. If Covid-19 comes back with a vengeance, and we’re all forced to work from home again, Workspace is likely to struggle. Meanwhile, if we see a big recession, Workspace may not be able to collect rent from its tenants. It’s worth noting that the stock has a higher valuation (a forward-looking P/E ratio of 33), so there’s not a lot of room for error.

Overall however, I think the long-term risk/reward proposition here is attractive.

Growth and dividends

Another FTSE 250 dividend stock I’d buy today is Computacenter (LSE: CCC). It’s a leading provider of IT solutions (cloud computing, cybersecurity, remote work software and more) to businesses and government organisations. The prospective dividend yield on offer here is about 2.1%.

Computercenter is well positioned to generate solid growth in the years ahead, in my opinion. That’s because all over the world, companies are undergoing digital transformation and enhancing business processes with technology. Computacenter is essentially a ‘picks-and-shovels’ business for this trend. It provides companies with the tools they need to become fully digital.

But a risk to monitor here is the current semiconductor shortage that’s impacting the supply of electronic products. In the near term, the chip shortage could cause supply chain issues for CCC and hit profits.

I think this risk is factored in to the share price, however. Currently, the stock sports a forward-looking P/E ratio of just 18, which isn’t high at all, to my mind. It’s worth noting that last month, analysts at UBS upgraded the stock to ‘buy’ and raised their price target from 2,520p to 3,290p. That’s nearly 20% higher than the current share price.

We already know that many businesses are facing problems due to higher costs. Soaring energy prices are causing havoc for consumers and industrial customers. Supply chain problems and the global chip shortage are holding back car production. Lorry driver shortages have led to food shortages in UK shops.

Higher interest rates could push up the cost of debt for businesses and consumers, triggering a crash. On the other hand, prompt action by the Bank of England could help to bring other costs — especially energy — down to more normal levels. The situation is delicately balanced. Here’s what I think could happen next.

Why higher interest rates could cause a stock market crash

There’s no fixed relationship between the stock market and interest rates. But there are some common patterns. When interest rates rise, consumer and business spending tends to fall.

Higher interest rates make borrowing money more expensive. They also mean that savers can earn more by keeping cash in their accounts.

When consumer and business spending falls, economic activity tends to slow too. For this reason, rising interest rates are often linked to a falling stock market.

What about inflation?

Of course, rising costs can also cause economic activity to slow. UK inflation is currently running at 3%, the highest level seen since 2008. Some estimates suggest inflation could peak at 6% over the next 12 months.

Here in the UK, we’ve already seen some big industrial companies cut back on gas use in the face of rising costs. More cutbacks could be needed this winter if the UK runs short of gas.

There are problems in other areas, too. Companies have been absorbing some rising costs, such as shipping, labour, and other raw materials. But if costs stay high, businesses will have to increase their prices or see their profits collapse.

Higher prices mean that consumers and businesses might start to delay their spending plans. That could lead to a slump in economic activity — and potentially a stock market crash.

Is it too late to buy shares?

Are things really as bad as I’m suggesting? There’s no way to be completely sure. Over the last 18 months, normal patterns of supply and demand in the economy have been badly disrupted.

Returning to normal, balanced levels of activity was always going to be difficult. It may just be that we’ll need a few more months for things to settle down. 

In any case, I’m not too worried about the risk of interest rate rises. The Bank of England rate is currently just 0.1% — an all-time low. A rate rise to 0.25% is being rumoured in December. That’s still very low by historic standards and is well below the pre-pandemic level of 0.75%. I don’t think it would be enough to trigger a stock market crash.

Fear of a stock market crash is certainly not stopping me from buying shares. Indeed, I think the sell-off we’ve seen since September has created some interesting buying opportunities. In the remainder of this article, I’m going to look at three UK shares that are on my buy list at the moment.

UK shares: what I’m looking for

As a long-term investor, my aim is always to find good quality companies at reasonable prices. I want to hold my shares for years, so I need them to be able to deliver steady growth and rising dividends.

I don’t want to worry about whether the companies I’m invested in are likely to go bust. To minimise this risk, I avoid companies that are loss-making or have too much debt.

Right now, I also have another requirement in mind. I think there’s a risk that the global economy could slow next year, so I’m looking for businesses with defensive characteristics.

A consumer stock I’d buy in a market crash

One UK share I’d buy today is Tesco (LSE: TSCO). As the UK’s largest supermarket, Tesco has great buying power and serious economies of scale. I reckon Tesco will find it easier to handle rising costs than its smaller rivals.

I’m also encouraged by this retailer’s continued growth. Sales rose by 3% to £27,331m during the first half of this year. Tesco’s operating profit rose by 30% to £1,304m during the six-month period, as pandemic costs faded away.

The main risks I can see are that Tesco could start to diversify or make acquisitions overseas in the hunt for new growth. Last time this was tried, it ended badly.

Fortunately, I think that’s unlikely under current management. CEO Ken Murphy has made it clear that he’s focused on generating shareholder returns from the core UK business.

With Tesco stock trading on 13 times earnings and offering a market-beating 3.7% dividend yield, I’d be happy to buy today.

20 years of dividend growth

Another FTSE 100 stock I’d buy in this uncertain market is defence group BAE Systems (LSE: BA). The group’s long-term focus and diverse mix of defence businesses should mean that it’s able to ride out short-term issues without too much difficulty.

This business hasn’t cut its dividend for more than 20 years and was largely unaffected by the events of last year. Although BAE does have a rather large pension deficit, rising interest rates could help here. The complexities of pension accounting generally mean that liabilities fall when rates rise.

Defence stocks aren’t everyone’s cup of tea. But I’ve followed BAE for years and it’s been a reliable performer. With a tempting 4.2% dividend yield, I see this as a defensive buy today.

A tech growth story

My final pick is technology stock Computacenter (LSE: CCC). This FTSE 250 company provides IT solutions for corporate and public sector clients. Sales exploded last year as millions of people needed to start working at home.

Some customers may cut back on spending this year after last year’s upgrades. That could pressure on this year’s results, but I’m not worried. This business has a long track record of growth — sales and profits have doubled since 2015.

I rate management highly here, too. CEO Mike Norris is the longest-serving boss in the FTSE 250. He’s already led the company successfully through some difficult times.

Computacenter’s share price has slipped back recently, leaving the stock on 17 times forecast earnings, with a 2.3% yield. I’m tempted to buy at this level.