Are these the best yielding dividend stocks in the UK?
Dividend—paying companies mean a reliable source of returns and often represent future growth prospects for investors. We list some of the UK’s top dividend stocks with high dividend yields and how you can buy them.
How to trade or invest in dividend stocks
- Learn more about dividend stocks
- Decide whether you want to invest or trade
- Open an account
- Search for your chosen dividend paying stock on our app or web platform
- Make your investment or trade
When you invest, you buy and hold stocks over an extended period of time with the view that they’ll increase in value. By holding dividend stocks and either reinvesting, or keeping the dividends, it pays out, you can build wealth overtime and earn both a growth and passive income.
Trading a more short-term view and looks to take advantage of smaller market movements. It uses leverage which enables you to take a position much larger than your initial deposit.
For example, with 5:1 leverage, you could open a £5,000 position while only depositing £1,000 as ‘margin’. A 10% market movement could result in a 50% gain or loss on your deposited margin.
It’s worth noting however that market movements can be unpredictable and whilst negative balance protection prevents you from losing more than your initial deposit, you could still lose the full amount you put in.
Best UK dividend yielding shares to watch
What are some of the best dividend-yielding shares worth watching? Here are some of the shares we think are worth a closer look. Note that these stocks are the highest yielding UK shares with a dividend cover ratio of 1 or higher. Past performance is not a guide to future performance. Always do your own research.
M&G – dividend yield: 9.2%
- Most recent dividend: 13.50p
- Latest dividend payment date: 9 May 2025
In 2024 M&G reported stable results where positive market movements helped assets under administration increase to £346 billion, up from £333 billion the year before and its underlying operating profit reached £837 million.
The company performed well with, beating its profit expectations due to successful cost—cutting efforts which helped improve profitability in its assets management segment. If funds permit, the company also announced it’s looking to increase its dividend payments each year.
In May this year M&G paid an interim dividend of 13.50p to shareholders. With a cover ratio of 1.4, the company appears to be well positioned to continue with dividend payments throughout 2025.
Our analysts have given the stock a buy rating with an average price target of 241p, up 10.91% from its current value.
B&M— dividend yield: 8.9%
- Most recent dividend: 15p
- Latest dividend payment date: 14 February 2025
Retail company B&M owns 707 stores across France and the UK based in shopping districts, retail parks or town centers. Its product range offers a wide variety of items spanning home goods, groceries, clothing and pet supplies.
The company delivered strong Q4 results, which brought its full—year results in line with expectations.
Revenue increased by 3.7%, mostly due to a 5% increase in new stores. Strong performance in France helped offset declines in sales from the UK.
Looking ahead, B&M plans to continue this expansion over the next two years and launch 73 new stores.
Thanks to a strong performance in 2024, the retailer was able to reward shareholders with a special dividend of 15p. Although future dividend payments aren’t guaranteed, B&M’s robust cover ratio of 4.7 indicates the company is well positioned for future payouts.
Phoenix Group – dividend yield: 8.8%
- Most recent dividend: 27.35p
- Latest dividend payment date: 21 May 2025
Phoenix Group is a savings and investment company with a range of product offerings, designed to help customers at all stages of their financial journey. Its four main segments are Pensions and Savings, Retirement Solutions, With—Profits and Europe and Other.
In 2024, the company reported strong financial results, bringing in a 22% increase in operating cash generation and meeting its 2026 goal two years early. As a result, the company has upped its cash target for 2024—2026 to 5.1 billion with £1.1 billion in extra cash which it plans to use to help reduce debt.
On 21 May this year, Phoenix paid out a dividend of 27.35p per share to shareholders, up from 26.65p the year before. With a dividend cover of 6.0 the company seems well positioned to continue strong dividend payments.
Vodafone – dividend yield: 8.1%
- Most recent dividend: 2.25¢
- Latest dividend payment date: 7 February 2025
Vodafone’s Q3 results came in better than expected with revenue growth increasing by 5% year— on— year to €9.8 billion. Growth in Turkey, Africa and Other Europe, helped to offset weaker sales in Germany.
The company isn’t immune to the key challenges impacting the telecom sector at the moment with low sales growth relative to spending being a big one. To help overcome this, Vodafone has restructured by cutting jobs and has agreed to merge its UK business with Three. These changes are positive, but investor sentiment remains cautious, a view that is likely to continue if its performance in Germany doesn’t improve.
On 7 February the company distributed a dividend of 2.25¢ per share to shareholders. This dividend payment was reduced from 4.50¢ the year before after selling its Spanish and Italian operations. Vodafone has a dividend cover ratio of 6.04, which indicates that the company has enough cash to continue paying dividends over the next year.
British American Tobacco – dividend yield: 7.7%
- Most recent dividend: 60.06p
- Latest dividend payment date: 7 May 2025
Despite its best efforts, British American Tobacco PLC (LSE) is unlikely to appear in any ESG fund (environmental, social, governance) investment portfolio. However, as an income seeker’s stock it’s desirable as the company pays a generous dividend.
In 2024 the company saw sales increase by 1.3%, with revenue from New Category products up almost 9%. Across the US, sales from traditional smoking products continue to decrease, posing a threat to BATs profit margins. To overcome this, the company are looking to move customers onto its next generation vapes products. However, new legislation banning/ limiting consumer access to these New Category products may be introduced by many governments. If this happens BATs profit will be negatively impacted.
The company have recently announced a dividend of 60.06p which will be paid out to shareholders in May this year.
Rio Tinto — dividend yield 6.9%
- Most recent dividend: 177.00¢
- Latest dividend payment date: 17 April 2025
Mining company Rio Tinto reported solid H1 results that were in line with market expectations. Underlying earnings reached $5.8 billion and operating cash flow reached $7.1 billion.
In 2024, the mining company Rio Tinto performed well with its financials remaining stable despite the falling price of iron ore. This was largely due to successful cost cutting initiatives and growth in copper. -
The company also agreed to buy Arcaduim Lithium for $5.85 per share. Whilst the lithium market is currently oversupplied, as the increased demand for Electric Vehicles increases, this is expected to change, and the substance is likely to be in high demand and in the long term could positively impact the company’s balance sheet.
In April this year the company distributed a dividend of 225.00¢ per share to shareholders. With a dividend cover ratio of 2.2 it’s likely strong dividend payments will continue, however this isn’t guaranteed as the company remains sensitive to price swings.
Our analysts have given the stock a buy rating with a predicted price target of 5901p in the next 12—month period, up 26.21% from its current price.
WPP — dividend yield 6.6%
- Most recent dividend: 24.40p
- Latest dividend payment date: 4 July 2025
- Latest dividend payment date: 8 May 2025
WPP is a UK—based advertising company. It helps businesses in a range of industries promote their brands and increase customer reach through services such as digital marketing, public relations, market research and media buying.
The company has had a slow start to the year with revenue falling 2.7% across all regions, with the UK seeing the biggest drop. This weak performance is expected to continue into the second quarter and although the company remains hopeful tech spending will pick up, analysts remain uncertain as to whether it’ll meet its full year guidance.
The company is trying to stay competitive and modernise, but its progress has been slower than some competitors' and this has negatively impacted its financials.
WPP have recently announced a dividend of 24.40p which will be paid out 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.
BP— dividend yield 6.5%
- Most recent dividend: 8.00¢
- Latest dividend payment date: 27 June 2025
BP is an energy company which operates across four main segments. These are Gas & Low Carbon Energy, Oil Production & Operations, Customers & Products and Other Businesses & Corporate.
The company recently announced a strategy reset where it would pivot away from its earlier commitments to renewable energy and go back to focusing on its core oil and gas operations.
After announcing this strategy, BP’s Q1 results were disappointing with sales falling by 5% and net profit halving. The company has made some progress with new discoveries and project startups, but it’ll take time for this to be seen in profits and there’s always the risk it may not perform as well as expected.
BP has recently announced a dividend payment of 8.00¢, up from 7.27¢ the year before. Its cover ratio of 5.0 indicates that the company has enough cash to continue paying dividends. Although, its main focus is on reducing debt so payments may not be as much as shareholders have gotten used to.
Schroders- dividend yield 6.3%
- Most recent dividend: 15.00p
Schroders is an asset management company that offers wealth, retirement and insurance services across the UK, Ireland and Canada through several segments.
The company performed well during Q1 of 2025 bringing in £1.1 billion in net cash flows which was largely driven by strong demand in its Wealth Management segment and private assets. This helped offset outgoings from its multi—asset and equity funds.
The company’s most recent dividend payment of 6.50p remains consistent year—on—year and with a cover ratio of 3.1 the company seems to be in a good position to continue these payments.
Schroders has recently announced a partnership with the savings and retirement business Pheonix Group which would increase their presence in the private markets. Going forward, it’ll be interesting to see the impact this has upon stock performance and future dividend payments.
Aviva — dividend yield 6.1%
- Most recent dividend: 23.80p
- Latest dividend payment date: 22 May 2025
Insurance provider Aviva has provided good returns for investors over the past 4 years as rationalisation and cost—cutting efforts have proved successful.
So far, 2025 is no exception to this trend, with the company showing strong growth throughout Q1 largely due to new, targeted acquisitions that have reduced its reliance on capital heavy businesses. Its recent plans to buy Direct Line will help further strengthen the company’s position in UK motor and home insurance.
With interest rates falling, Aviva’s strong dividend is likely to be a key attraction. The company has recently increased its interim dividend by from 22.30p per share, to 23.80p per share, due to its impressive performance.
Although generous dividend payments are dependant on company performance and can never be guaranteed, Aviva’s cover ratio of 8.7 suggests that the company is well positioned to continue dividend payments.
How to invest in best dividend stocks in the UK
You can invest in the UK’s top dividend stocks with us, from as little as £3 commission. Here’s how to get started with share dealing:
- Create an account with us: you’ll get access to over 13,000 stocks, 2000 ETFs, investment trusts and more
- Buy shares: once you’ve chosen your shares, purchase them on your share dealing account and monitor your investment
- You can also trade shares using spread bets or CFDs, which means you won’t own the underlying asset, but you can speculate on upward or downward share price movements
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Dividend stock investing strategy: what you need to know
Dividends are often viewed as a crucial element of a strategy, providing a regular stream of income, or used to buy more shares in a company (a process known as reinvesting). The difference in an investment’s return based on capital appreciation only can be drastically different from that including the returns from dividends.
However, dividends shouldn’t be the sole reason for investing in a company, but rather a bonus element to the key requirement of selecting a company with strong fundamentals and or a bullish price trend. It’s also important not to pick companies based on dividend yield alone, since dividends can be reduced or increased.
Usually, a well-managed company will look to pay dividends as a way of demonstrating its financial strength and attractiveness for investors, but there’s a risk that companies may pay out dividends from cash reserves rather than from profits.
A very high dividend yield, usually above 7%, could be a red flag for investors. Usually, dividend yields increase sharply when a share price drops, since the dividend yield is calculated as: (dividend per share divided by share price) x 100. Such drops prompt a sudden increase in the yield without increasing the amount paid out in dividends.
Companies that see sharp increases in yields are often tempted to cut the dividend as a result, since the yield can still be kept to an attractive level (2% to 3%), but money can be saved in terms of reduced dividend pay-outs.
Choosing dividend-paying companies for a potential investment thus requires an extra level of work beyond looking at the financial statements or examining the price chart. It’ll mean investors must look at the level of dividends, their growth (or otherwise) and how these are funded. In particular, the dividend coverage ratio is key.
This is calculated by dividing net profits by the dividend to produce a ratio. Above 1 signals that the dividend is at least covered fully by profits and that existing cash reserves aren’t being used to pay dividends. Below 1 is also a potential red flag, since it shows profits don’t cover the pay-out and thus cash reserves are employed to maintain the dividend. This runs the risk of a dividend cut or cancellation of the entire payout.
How to identify the UK’s best dividend stocks
There are a few steps you can follow to identify the UK’s best dividend stocks:
Use a market screener
You can use online resources such as a market screener to look for companies with a proven track record of delivering dividends. A screener also makes it easy to compare high-yield dividend stocks against each other. This way, you can choose the stocks that best suit your risk profile.
Analyse past dividend payments
By analysing past dividend payments, you can get a sense of how the company prioritises them. Some companies may be so committed that they dip into cash reserves to keep investors satisfied, while others do the opposite and use dividend funds to pay for day-to-day activities.
If past dividend payments were very high and earnings were low, it could be a red flag. That’s because a company that spends too much on dividends maybe harming future growth. You can use ratios such as the dividend coverage ratio to determine the health of a company’s dividends.
Learn more about the company
Dividends are affected by several factors, so it’s important to learn as much about the company as possible. This includes share price activity, fundamentals and all corporate actions. These factors will help you establish a company’s overall health, as well as the prospects for dividend payments.
Read more about fundamental analysis
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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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