Are these the best FTSE 100 dividend stocks to watch in July 2025?

Back in April, the FTSE 100 experienced significant volatility dropping from 8634 points to 7679 points due to economic uncertainties surrounding US tariffs and a potential trade war. It has since rallied, now standing at 8781 points as these tariffs were paused for 90 days and the US considers lowering tariffs on Chinese goods.

FTSE 100 macroeconomics

After meeting the Bank of England’s (BOE) CPI inflation target rate of 2.0% on 2 August 2024, interest rates have gradually been reduced by 0.75 basis points and currently stand at 4.25%.

Since then, inflation has risen and now stands at 3.4%, its highest rate in over a year as increased energy costs, water bills and council tax have come into play.

At its most recent meeting on 19 June, the BoE held rates at 4.25%. Although further cuts are expected later this year, with inflation faster than expected these cuts are likely to be more gradual.

Then there’s the AI—fuelled surge of the US tech stocks to consider. This may be a sustainable rise given the tech advances at hand or it may be a bubble that eventually bursts. If the latter, this excess capital may find itself within FTSE 100 dividend stocks until the storm blows over.

This all makes investing in FTSE 100 dividend stocks complex. In particular, the highest dividend yields can be hostage to economic policy — where individual investment cases and changing financial landscapes can create value traps or payout irregularities.

Open an account and start trading some of the top UK dividend stocks in 2025.

Best FTSE 100 dividend shares to watch

These shares are the highest yielding on the index with a dividend cover ratio of 1 or higher as of 23 June 2025. They may not be the best investments and the dividends and capital itself are not guaranteed.

B&M (Dividend yield: 8.9%)

B&M is a retail company that has 707 stores which are situated in retail parks, shopping areas and town centers across France and the UK. Its stores offer a variety of items which include food, homeware, clothing and pet products.

The company reported mixed FY25 results where challenging market conditions resulted in profits remaining flat. Its 70 new stores helped contribute to a 3.7% revenue increase, but losses were seen across LFL stores.

Over the next year, B&M aims to improve its negative LFL performance whilst continuing to expand and increasing its store count by 73.

The company has recently announced a dividend payment of 9.70p per share which will be paid out on 1 August this year. Although future dividend payments aren’t guaranteed, the company’s healthy cover ratio of 4.5 positions it well for future payouts.

Phoenix (Dividend yield: 8.8%)

Savings and retirement company Phoenix Group reported strong results throughout 2024 with operating profit up by 31%, driven by a good performance in savings, pensions and retirement solutions. As a result, the company has upped its 2026 guidance from £900m to £1.1bn.

On 3 April this year Phoenix Group paid a dividend of 27.35p to shareholders, up from 26.65p the year before. With a cover ratio of 6.0 the company appears well positioned to offer strong dividend payments throughout 2025.

The company remains optimistic about its performance for the rest of the year, with plans to continue investing in growth and reducing debt.

M&G (Dividend yield: 9.2%)

Savings and investment company M&G has two main arms to the company, life insurance and asset management. The way these two segments work together can be beneficial but is quite complex and difficult for everyday investors to understand, which can potentially limit demand.

The company performed well throughout 2024 and beat its profit expectations due to successful cost cutting and strong performance from its asset management segment. It also announced plans to increase dividend payments to shareholders each year if funds permit.

On 27 March this year, the company announced an interim dividend of 13.50p which will be paid out to shareholders in May. M&G has a cover ratio of 1.4, which indicates that if its strong performance continues, the company is well positioned to continue with dividend payments.

Going forward, the company aims to grow its Asset Management and Wealth side of the business, so its profits account for 50% of the overall business, whilst beginning to phase out its annuity portfolio and legacy products.

WPP (Dividend yield: 7.6%)

UK—based advertising company WPP helps businesses increase theor customer reach through a range of services including market research, digital marketing, media buying and public relations.

WPP has reported a weak start 2025 and this is expected to continue into Q2. Revenue fell by 2.7% across all regions with the UK seeing the largest drop. The company is hopeful that its performance will improve towards the latter half of the year, but this remains uncertain.

The company have announced a dividend payment of 24.40p per share which will be paid to shareholders in July. This is consistent with payments from the year before. Although its weak performance may prevent future payments, its cover ratio of 3.3 suggests it’s well placed for these to continue.

Rip Tinto (Dividend yield: 7.5%)

Mining company Rio Tinto delivered steady H1 results where underlying earnings reached $5.8 billion and operating cash flow reached $7.1 billion. This was in line with market expectations.

To further strengthen its position in the energy space, Rio Tinto strategically brought Arcaduim Lithium for $5.85 per share. Although the lithium market is currently oversupplied, this is expected to change with the increased demand for Electric Vehicles and in the long term could positively impact the company.

In April this year the company paid out a dividend of 225.00¢ per share to shareholders. With a dividend cover ratio of 2.2 it’s likely that dividend payments will continue, however this can never be guaranteed.

How to invest or trade in FTSE 100 stocks with us

1. Learn more about FTSE 100 dividend stocks
2. Decide whether you want to trade or invest
3. Open an account 
4. Search for your chosen stock on our web platform or app
5. Make your investment or trade

When you invest in a share you buy it outright with the view that it’ll increase in value over time.

Trading takes a more short—term view where you look to take advantage of smaller market movements. It involves leverage which allows you to take a position that’s larger than your initial deposit. This means market movements are magnified, and you could gain or lose money faster than expected.

For example, if you trade with 5:1 leverage, you could place a £1000 deposit and manage a £5000 position. A 10% increase or decrease in the market could result in 50% profit or loss on your initial margin.

Negative balance protection will prevent you from losing more than your initial deposit, but market movements can be fast and unpredictable, and you could lose your full deposit.