Are these the best UK shares to watch in February 2026?
A selection of some of the best dividend, growth and value UK stocks to watch this month. These companies have been selected for recent market news.
In 2026, the UK’s economic landscape continues to deliver a mixed outlook. Despite getting off to a strong start with GDP growth increasing by 0.7% in Q1 2025, UK economic growth has slowed to a very modest 0.1% by Q3 2025.
Throughout the year, the UK labour market is expected to remain soft but stable rather than sharply deteriorate. Economists expect unemployment to rise modestly in early 2026, with forecasts placing the jobless rate at about 5.3% by March 2026 before stabilising later in the year as economic growth nudges closer to potential. This weaker labour market reflects subdued hiring intentions, rising employment costs such as national insurance contributions, and ongoing business caution in the face of economic uncertainty.
Whilst it’s clear that interest rates are on their way down, these cuts will be more gradual if inflation remains high. At its last meeting on 18 December 2025, the Bank of England (BoE) Monetary Policy Committee (MPC) voted to cut the bank rate by 25 basis points to 3.75 % from 4 % in a narrow 5–4 vote. This decision reflected ongoing disinflationary trends and weakening demand, amid continued debate among policymakers about the timing and pace of future rate cuts.
At that meeting, members noted inflation was moderating, which provided scope for easing monetary policy, but they also emphasised that further progress on inflation and the labour market would guide future decisions.
Best UK shares to watch
Considering these themes, here are five shares we think could be the best UK stocks to buy now. These dividend, growth or value shares have been selected from recent market news. Always do your own research. Past performance is not a guide to future performance.
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Top dividend stocks
Legal & General (LGEN)
Legal & General stands out as one of the UK’s most attractive dividend plays due to its exceptionally high yield of 8.28%, which significantly exceeds the average among FTSE 100 stocks and even broader financials.
With annual dividends running close to double-digit percentage territory on current prices, the company’s dividend culture - supported by robust cash generation from its insurance and asset management operations - has consistently rewarded shareholders.
The company’s high - over 10% - dividend cover ratio is reassuring investors because it indicates that Legal & General generates significantly more earnings than it pays out in dividends, making those dividends more sustainable and less vulnerable to cuts during periods of weaker profitability.
Despite some structural and valuation headwinds, recent commentary highlights the potential for continued generous payouts and medium-term dividend growth forecasts, making Legal & General particularly attractive to investors prioritising current income in a low-growth environment.
Fundamental analysts have given the stock between a buy and hold rating with a predicted upside of 1% over the next year.
Dividend yield: 8.28%
Dividend cover ratio: 10.05
Legal & General weekly candlestick chart
British American Tobacco (LON:BATS)
Investors seeking reliable income may find British American Tobacco appealing because it remains one of the UK market’s higher-yielding dividend stocks, with a current dividend yield of 5.56% substantially above many peers and the broader market.
British American Tobacco has a long history of consistently paying quarterly dividends and has continued to generate strong cash flow, supporting its ability to distribute income even in more challenging market conditions.
The company’s strategic shift towards next-generation nicotine products, including heated tobacco and modern oral offerings, adds a growth dimension that could underpin future cash flows and support dividend sustainability, making it a compelling choice for income-focused investors looking for both yield and defensive characteristics.
Analysts rate British American Tobacco as a buy with a predicted upside of 5% over the next year.
Dividend yield: 5.56%
Dividend cover ratio: 57.80
British American Tobacco weekly candlestick chart
National Grid (LON:NG)
National Grid remains one of the most attractive dividend-oriented stocks in the UK market due to its stable and predictable cash flows underpinned by regulated utility operations.
As an operator of critical energy infrastructure in both the UK and the United States, National Grid benefits from long-term regulatory frameworks that allow it to earn steady returns on invested capital, smoothing earnings volatility and supporting a consistent dividend payout profile.
In an environment where macroeconomic uncertainty persists and interest rates remain elevated relative to the ultra-low levels of the previous decade, the relative defensive nature of utility earnings and National Grid’s commitment to returning capital makes its dividend yield compelling for income-focused investors seeking reliability and lower downside risk compared with more cyclical sectors.
Analysts have given National Grid a buy rating with a predicted upside of 3% over the coming year.
Dividend yield: 3.92%
Dividend cover ratio: 123.62
National Grid weekly candlestick chart
Top growth stocks
Rolls-Royce (LON:RR)
Investors looking for growth exposure in 2026 may find Rolls-Royce appealing given its remarkable turnaround and leadership position in aerospace, defence and power systems.
The company has delivered extraordinary share price performance over recent years as civil aerospace demand has recovered and defence budgets remain supportive, with Rolls-Royce now one of the FTSE 100’s standout performers and benefiting from long-term structural demand for aircraft engines, naval power systems and emerging technologies such as small modular reactors.
This combination of diversified revenue streams, improving profitability and secular demand drivers underpins the case for continued earnings growth and capital appreciation.
Analysts have given Rolls Royce a buy rating with a price target of 1,232p.
Dividend yield: 0.60%
Dividend cover ratio: 6.01 (5 year average)
Rolls-Royce weekly candlestick chart
Goodwin (LON:GDWN)
As one of the best-performing FTSE 250 stocks in 2025, Goodwin represents a compelling growth story rooted in engineering excellence and strategic positioning within high-growth defence and industrial niches.
The company supplies specialist precision castings and engineered products to long-duration programmes for submarine, frigate and aircraft carrier platforms - markets backed by sustained defence spending and major multidecade contracts, including strong participation in the Aukus submarine initiative.
Its alignment with secular growth in defence and industrial infrastructure, coupled with a family-aligned ownership structure that reinforces long-term strategic focus, makes Goodwin an attractive candidate for investors seeking above-average growth in the UK mid-cap space.
Dividend yield: 1.09%
Dividend cover ratio: 116.85
Goodwin weekly candlestick chart
Top value stocks
Aviva (LON:AV)
Aviva remains an appealing value stock for income-oriented investors in 2026 because it combines a high dividend yield of 5.89% with strong underlying fundamentals and clear strategic momentum.
The company is one of the UK’s largest diversified insurers with leading market positions in the UK, Ireland and Canada, and recent interim results highlight broad growth across general insurance and wealth management segments, underpinning its cash-generating capacity.
Aviva’s dividend yield remains among the more generous in the FTSE 100, reflecting both a commitment to returning capital and the potential for dividend increases if earnings continue to expand.
At the same time, the company has outlined a strategy focused on capital-light growth, customer-centric digital initiatives and efficiency gains, which supports the case that its current valuation may underprice future profitability and cash flows.
This combination of attractive yield, valuation support and strategic execution makes Aviva a compelling value candidate for investors seeking both income and long-term appreciation.
Analysts have given Aviva between a buy and a hold rating with a predicted upside of around 10% over the coming year.
Dividend yield: 5.89%
Dividend cover ratio: 66.49
Aviva weekly candlestick chart
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Top shares to watch summed up
The above five companies are just a small selection of top UK shares to buy now. Remember that any company can also fail and always do your own research.
Trade and invest in over 17,000 UK, US and global shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading or investing in shares with us, or open an account to get started today.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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