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10 best-yielding UK dividend stocks in 2022

Stocks that pay dividends can provide a great opportunity to increase the income diversification of an investment portfolio. If you are looking for high dividend stocks to add to your trading portfolio, this article covers the best-yielding dividend stocks available in 2022 from some of the biggest UK companies. Read on to find out which stocks offer some of the highest dividend rates in the FTSE 100 as of March 2022 (excluding special dividends). These figures are correct at the time of writing and may change in the future.

Please note that past performance is not a reliable indicator of future results.

Reviewed by
Chief Market Analyst
mhewson_CMC

What are the top 10 highest-yielding dividend stocks?

Instrument Min spread Margin rate Price Sentiment
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Rio Tinto is an Anglo-Australian mining corporation. It's one the world's largest miners, producing assets such as iron ore, diamonds, gold, copper, and uranium. The company has joint headquarters in London and Melbourne, where it's also listed on the ASX. It works on an international level across 35 countries.

Year Value
2021 793.00¢
2020 464.00¢
2019 382.00¢
2018 307.00¢
2017 290.00¢

Persimmon is a British house-building company with headquarters in York. Persimmon is made up of 31 regional operating businesses and builds homes in over 380 locations worldwide. It is one of the UK's most successful house builders.

Year Value
2021 235.00p
2020 110.00p
2019 0.00p
2018 235.00p
2017 235.00p

Imperial Brands is one of the largest tobacco companies in the world when measured by market share. Founded in 1901, it owns popular brands such as Golden Virginia, RizLa and JPS.

Year Value
2021 139.08p
2020 137.71p
2019 206.57p
2018 187.79p
2017 170.72p

4. M&G - 8.47%

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M&G is an investment management company headquartered in London. It deals primarily with equities, portfolio management, fixed income and real estate, both in the UK and overseas. The company is fairly new to the FTSE 100, only registering on the London Stock Exchange in 2019 after a de-merger from its parent company, Prudential.

Year Value
2021 18.30p
2020 18.23p
2019 11.92p
2018 N/A
2017 N/A

Phoenix Group Holdings is one of the largest insurance providers in the UK. The company specialises in the acquisition and management of life insurance and pension funds. Founded in 1857 as The Pearl Loan Company, it has acquired multiple companies since then, including Standard Life Assurance and ReAssure Group.

Year Value
2021 48.90p
2020 47.50p
2019 46.80p
2018 46.00p
2017 45.14p
Spread bet on 9,000 dividend-yielding shares

Abrdn (formerly known as Standard Life Aberdeen) is an investment company that manages global assets including equities, real estate, and private markets. It's one of the largest active asset managers in the UK with headquarters in Edinburgh, Scotland. The company was formed from the merger of Standard Life and Aberdeen Asset Management in 2017.

Year Value
2021 14.60p
2020 14.60p
2019 21.60p
2018 21.60p
2017 21.30p

British American Tobacco is a multinational company that manufactures and sells tobacco products in more countries around the world than any of its competitors. Founded in 1902, it's now the largest cigarette maker in the world based on net sales. Due to its international presence, BATS is listed on four stock exchanges.

Year Value
2021 215.60p
2020 210.40p
2019 203.00p
2018 195.20p
2017 100.10p

Legal & General is a financial services company that deals with pensions, lifetime mortgages, annuities and investments for more than 10 million clients worldwide. It has headquarters in the City of London.

Year Value
2021 18.45p
2020 17.57p
2019 17.57p
2018 16.42p
2017 15.35p

Antofagasta is a copper mining company based in Chile with headquarters in London. It carries out mining and exploration activities and also has interests in transport, mainly rail and road cargo. The company owns and operates four mines in central and northern Chile.

Year Value
2021 142.50¢
2020 54.70¢
2019 17.80¢
2018 43.80¢
2017 50.90¢

Taylor Wimpey is one of the largest housebuilding companies in the UK with headquarters in Buckinghamshire. It offers a wide range of homes from small and affordable apartments to luxury six-bedroom houses. As well as the UK, the company also operates in Spain.

Year Value
2021 8.58p
2020 4.14p
2019 3.84p
2018 6.24p
2017 4.74p


Please note that past performance is not a reliable indicator of future results.

Interested in high-dividend ETFs?

Learn which exchange-traded funds (ETFs) have the highest dividend yields, including those from Vanguard, iShares and Global X.

Learn about the best-dividend ETFs

How to pick high dividend stocks

Investing in stocks that pay large dividends and deliver consistent growth is a popular investment strategy. Investing in these dividend or income stocks is more complicated than simply choosing a stock that has a high yielding dividend rate. Income stocks are vulnerable to dividend cuts, missed payments, dividend elimination and share price crashes.

Profitability

An income stock should be profitable. Unlike growth stocks, which are more of a speculative investment, income stocks should show year-on-year consistent profitability. The consistency of increasing profit helps to ensure that there will not be any dividend cuts or payout problems in the future. This follows the general logic that a financially stable company will be more likely to payout a regular dividend.

Payout ratios

A payout ratio represents the relationship between a company’s income and its dividends. As companies usually pay dividends out of their profits, a company with dwindling profits could make cuts to their dividend. Therefore, a company’s dividend payout ratio should correlate with its net income. By comparing these two metrics, you can start to establish if the current dividend rate is sustainable. Companies with a high payout ratio may be committed to paying out such a dividend, with fears that investors would look elsewhere if they cut the rate. Moreover, some companies or industries generally pay a higher dividend, as growth opportunities are not as evident.

Dividend cover

Dividend cover is a helpful ratio in determining how sustainable a company’s dividend is in the long-term, similar, but inverse to payout ratio. A company’s dividend cover indicates its capacity to pay dividends out of profit earned. It is displayed as a ratio, which shows how many times the dividend is covered by profits available. See below for the formula.

Dividend Cover = EPS (Earnings per share) / DPS (Dividends per share)

A ratio above 1.0 is considered healthy and anything less than 1.0 is possibly not sustainable and suggests that the dividend is at risk of being cut. Many companies aim for a dividend cover of around 2.0 to ensure they efficiently use their capital in a sustainable manner.

Dividend volatility

When looking at a company’s previous financial and dividend information you can make an informed decision based on the stock’s dividend volatility. If a stock has a history of paying high dividends on time and consistently increasing the dividend yield, it can be classified as a stable income stock. Although slow and steady growth may not be exciting, combining the reinvestment of dividends, increasing dividend yields and compound interest can provide great returns.

This, therefore, stresses the importance of choosing stocks that are unlikely to cut their dividend rate whilst maintaining consistent growth. When a company struggles financially and cuts its dividend, you could lose your dividend income, which is based on the current value of your initial investment. A struggling company with a declining share price has double the impact, as your dividend payout will suffer from the loss of your initial investment.

Dividend growth

Companies can increase the dividend of a stock even if the company is struggling financially. Based on the volatility of the dividend, it can be worth analysing whether or not the EPS (earnings per share) of the business is growing. If the company has a relatively healthy dividend but its EPS is falling, the dividend will likely experience some stress.

Is there a trading platform for dividend stocks?

When using leveraged trading methods traders can play both sides of the market by ‘buying’ the asset and going long, or ‘selling’ the asset by going short. When ‘buying’ and going long, traders are entitled to the assets dividend payment and will receive it in their account as normal. However, for traders who wish to ‘sell’ or short their stock, they are charged the dividend’s value accordingly.

We offer spread betting and CFD trading on a large number of best-yielding dividend stocks via our award-winning trading platform​, Next Generation*. Sign up to familiarise yourself with the platform using a demo trading account, in order to take advantage of the many price tools, drawing tools and technical indicators available for the stock market. See our competitive costs on our trading fees​ page.

Dividend stocks app

Our platform is also available on mobile and tablet devices as part of our advanced dividend stocks app. Traders have the same full access to chart forums and social trading news so that you can keep up to date on-the-go. Find out more about spread betting and trading CFDs using our mobile applications​.

Summary

Investing in and trading on high dividend stocks can contribute to a balanced and diversified investment portfolio​. The more diverse the array of assets you hold, the more you spread the risk and potential loss of your investments.

When choosing stocks for dividend investing​, it may be very useful to view the history of the stock’s dividend and analyse other company fundamentals such as a company's valuation​. All of these factors could influence the business’ ability to pay dividends. Beyond analysing the dividend history and company fundamentals, it can also be useful to analyse how other companies in that competitive space are performing.

In the end, you cannot guarantee a company is going to pay a dividend, or earn enough to match or exceed their last dividend payments. However, you can make a decision based on a number of valuable metrics such as the variables covered, to make the most informed decision possible.

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FAQs

How is a stock dividend calculated?

Stock dividends yields are calculated by dividing the annual dividends per share by the price per share. This data is usually taken from the previous year’s financial report. Learn more about how to trade shares with a high dividend yield.

How are stock dividends paid?

Stock dividends are commonly paid twice a year to shareholders who have purchased shares in a company, at a pre-determined date following a company releasing its half- and full-year results. The dividend value is based on how many shares the shareholder owns.  When trading on shares with us, you may be entitled to dividend adjustments. Learn more about these types of corporate actions.

Why invest in stocks that don’t pay dividends?

In some cases, stocks that don’t offer dividends to shareholders can have a higher potential for growth. Instead of offering payouts, these companies prefer to reinvest their earnings into new projects, and this may lead to a rise in share price and overall company value. Read about the company fundamentals to take into consideration when valuing the health of a stock.

What are the advantages of dividend stocks?

Investing in dividend stocks offers relative stability and could help create a more balanced investment portfolio, as well as low effort-to-reward income. Companies consistently paying dividends are usually large-cap or blue-chip, with some exceptions. Read more about trading blue-chip stocks. However, companies can slash their dividend at any point if they are facing economic hardship or uncertainty, so this should be considered when opening a position on a dividend stock.

Do tech stocks pay dividends?

Most of the larger and established tech giants choose not to pay dividends to their shareholders, and some dedicate a very modest percentage. If you’re looking to earn a more generous dividend payout, it may be worth considering pharmaceutical stocks instead.


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