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10 best-yielding UK dividend stocks in 2022

Published on: 02/11/2021 | Modified on: 20/09/2022

Stocks that pay dividends can provide a great opportunity to increase the income diversification of your portfolio, as select companies will give out a regular percentage of their earnings to loyal shareholders. This article explains how they work, the advantages and disadvantages they offer, and we provide a list of the top FTSE dividend stocks by yield (excluding special dividends), as well as some US options. This information is up to date as of July 2022.

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

KEY POINTS

  • Dividends are a form of reward to shareholders for investing in the company
  • They are most often paid on a quarterly basis, although some companies choose to issue monthly payouts
  • Many of the top payouts come from the UK’s biggest companies within the energy, financial and consumer goods sectors
  • With derivative trading, you won’t receive payouts as you don’t own the stock
  • If you open buy or sell positions at an opportune moment, you may be entitled to an equivalent dividend adjustment
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What are dividend stocks?

Dividend paying stocks are companies that regularly share profits with their shareholders. While most companies just make (or lose) traders’ money on their market performance, others can give their shareholders a regular payout of cash, or further shares. This both rewards the shareholders for their support and sends a signal from a successful company to attract more investors.

The payout typically happens four times a year following the company’s quarterly earnings statement. However, because it’s based on profits, the amount is not guaranteed, and in poor-performing quarters, it may not be paid at all.

Traders looking to speculate on stocks may take into account a company’s yield. This is a percentage representing the company’s annual dividend compared with its share price. It can be calculated using the following formula:

Dividend yield = annual dividend per share / company share price

Those looking from an income from their trading may see dividends as a key factor in their choice of stocks. Others, however, will be more attracted by a stock’s total return.

How to calculate dividends

  1. Work out the company's net income. This is usually found on its financial statements.
  2. See how many shares are outstanding. This number can be found on the company’s balance sheet.
  3. Divide the net income by the number of shares outstanding. The result will give you the earnings-per-share (EPS).
  4. Alternatively, you can use the company's payout ratio. Use the midpoint of historical dividend payouts as the typical ratio and multiply this by net income per share to calculate dividend per share.
  5. Find the dividend yield. Divide the annual dividend per share by the company's share price to get a percentage, which is the yield.

What are the top 10 highest dividend stocks in the UK?

InstrumentMin spreadMargin ratePriceSentiment
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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.

YearValue
2021793.00¢
2020464.00¢
2019382.00¢
2018307.00¢
2017290.00¢

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.

YearValue
2021235.00p
2020110.00p
20190.00p
2018235.00p
2017235.00p

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.

YearValue
2021142.50¢
202054.70¢
201917.80¢
201843.80¢
201750.90¢

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.

YearValue
202114.60p
202014.60p
201921.60p
201821.60p
201721.30p

Anglo American is a leading mining company. Its diverse portfolio of materials spans platinum, diamonds, copper, iron ore, nickel and more. The company has mining operations and projects across 15 countries and 56 sites.

YearValue
2021289.00¢
2020100.00¢
2019109.00¢
2018100.00¢
2017102.00¢

6. M&G - 8.58%

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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.

YearValue
202118.30p
202018.23p
201911.92p
2018N/A
2017N/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.

YearValue
202148.90p
202047.50p
201946.80p
201846.00p
201745.14p

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.

YearValue
2021139.08p
2020137.71p
2019206.57p
2018187.79p
2017170.72p

Admiral Group is a financial services company founded in 1991 with headquarters in Cardiff. It offers services such as car insurance, personal loans, home and travel insurance, price comparisons, and legal services. The business has offices in 7 countries and serves 7 million customers worldwide.

YearValue
2021279.00p
2020156.50p
2019140.00p
2018126.00p
2017114.00p

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.

YearValue
202118.45p
202017.57p
201917.57p
201816.42p
201715.35p


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.

Explore dividend ETFs

How to trade on our share prices

  1. Open an account. A live trading account allows you to spread bet or trade CFDs on our full product library of stocks. You can add funds to your account via bank card, bank transfer or PayPal. If you want to practise first with £10,000 of virtual funds, then open a demo account.
  2. Use our exclusive stock research tools. We offer Morningstar equity reports and a live Reuters news feed to keep you up to date with market news and inform your trading efforts.
  3. Find the right stocks for you. You should spend a considerable amount of time investigating the stocks you wish to trade, as you may want to hold it for several months or even years.
  4. Manage your risk. Before placing your trade, make sure you have followed risk-management guidelines as part of your strategy, such as adding stop-loss controls.
  5. Monitor your position. Depending on how the stock performs over time, you may wish to buy more or sell the stock if it is no longer serving the purpose that you purchased it for.

Spread betting

Spread betting is a form of derivative trading that allows you to place a bet on which direction you think a stock will move, speculating on price changes. Depending on whether the market moves in your favour or not, you stand to make a profit or loss. Spread betting is tax-free in the UK and Ireland* and also comes with zero commission charges on share profits (other fees apply).

CFD trading

Contracts for difference (CFD) are another popular method of leveraged trading. CFD traders speculate whether they believe particular stocks will fall or rise by entering a contract stipulating the buyer must pay the seller the difference between an asset’s current value and its value when the contract expires. CFDs are available globally but are subject to capital gains tax and commission fees.

Do you get paid dividends when trading derivatives?

While spread betting and CFD trading mean that you don’t get the dividend from the share itself — because you don’t own it — you do get an equivalent adjustment, as long as you have bought or sold at the right time.

In each quarter is a date of record, in which companies check and confirm their lists of shareholders. The day before this is known as the ex-dividend date, a cut-off point when the right to dividends passes from the seller to the buyer. To be eligible for the next yield, you must buy the stock and own it by the close of trading one business day before the ex-dividend date. If you buy on the ex-dividend date or later, the seller will receive the next dividend and you will not be eligible to receive any until the following quarter.

How do adjustments work?

Share prices can be impacted by corporate actions, which in this case means when the company pays out to its shareholders. When a stock goes ex-dividend, the value of that stock effectively falls by the dividend amount, and therefore impacts any spread bet position you hold in that company.

If you have gone long (bought with the intention of selling higher), this payout will have reduced your position, so we would credit your account with the dividend amount. If, on the other hand, you had shorted the stock (sold with the intention of buying back cheaper) you would have benefitted from the drop in the price. As a result, the equivalent amount would be deducted from your account, which means you don’t lose or gain anything from the adjustment.

Learn more about these types of corporate actions​.

How to find high-dividend stocks

High dividend shares that deliver consistent growth are, unsurprisingly, very popular — but choosing the right ones still needs careful thought. Even the best-yielding stocks are vulnerable to dividend cuts, missed payments, dividend elimination and share price crashes. When choosing stocks, you need to consider the following.

Profitability

An income stock should be profitable. Unlike growth stocks, which are more of a speculative approach, income stocks should show year-on-year consistent profitability. A financially stable company is inevitably more likely to pay out a regular yield, and consistent increasing profit is generally a good indicator that there are unlikely to be cuts or payout problems in the future.

Payout ratios

A payout ratio represents the relationship between a company’s income and its dividends. As companies usually pays from their profits, a firm with dwindling profits could make cuts to their dividend. Therefore, a company’s payout ratio should correlate with its net income. By comparing these metrics, you can start to establish if the current rate is sustainable. For example, companies with a high payout ratio yet declining profits may pressure themselves to continue to pay that level of dividend to prevent investors from going elsewhere. Traders should be aware a high dividend payout is not on its own a reliable indicator of a healthy or profitable company.

Dividend coverage ratio

This is a helpful figure in determining a company’s capacity to pay dividends out of its profit in any given period. It demonstrates how many times the company could pay out (cover) its yield with the profits available.

Dividend cover = earnings per share (EPS) / dividend per share (DPS)

A ratio above 1.0 is considered healthy, although many companies aim for a cover of 2.0 to ensure they use their capital efficiently and sustainably. Any ratio less than 1.0 suggests the current payouts are not sustainable and the dividend is at risk of being cut.

Dividend volatility

Looking at a company’s previous profits and dividend information can be a reliable indicator of the stock’s volatility. If a stock has a history of paying high yields on time and consistently increasing the dividend, it can be classified as a stable income stock. Although slow and steady growth may not be exciting, combining the reinvestment of dividends and compound interest can provide great returns.

This stresses the importance of choosing stocks that are unlikely to cut their rate while maintaining consistent growth. When a company struggles financially and cuts its payments, it jeopardises the trader’s income.

Dividend growth

Stocks that pay a high yield do not necessarily mean the company is doing well. A more reliable indicator is whether the company’s EPS is growing. Therefore, it is necessary to look at more than just dividend growth when assessing a company’s performance.

What are the top 10 dividend-paying stocks in the US?

Here are some of the best-yielding dividend shares in the US according to data from NerdWallet, as of July 2022.

InstrumentDividend yieldMin spreadMargin ratePrice
-6.66%---
-5.68%---
-4.96%---
-4.90%---
-4.71%---
-4.48%---
-4.19%---
-4.17%---
-4.11%---
-3.99%---

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

Where and how can I get started?

Starting to trade with us is a fairly straightforward process for both beginners and experienced traders. Our Next Generation trading platform, educational resources and supportive client services team all help our clients to truly understand the markets, enabling you to realise your potential and make the most of your trading experience.

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Follow our step-by-step platform tutorial on how to start trading using our bespoke platform and tools.

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FAQs

How are 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.


*Tax treatment depends on your individual circumstances. Tax law can change or may differ in a jurisdiction other than the UK.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

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