Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

The 10 best-yielding dividend stocks in the UK

Stocks that pay dividends can provide a great opportunity to increase the income diversification of an investment portfolio. If you are looking for dividend-yielding stocks to add to your trading or investment portfolio, this article covers the best-yielding dividend stocks available in 2021 from some of the UK’s largest companies.

Read on to find out which stocks offer some of the highest dividend rates in the FTSE 100 as of January 2021 (excluding special dividends). These figures are correct at the time of writing and may change in the future. Read more about trading the FTSE 100.

See inside our platform

Get tight spreads, no hidden fees and access to 9,300+ instruments.

1. M&G

M&G PLC​ is an investment management company that is headquartered in London. It deals primarily with equities, portfolio management, fixed income and real estate, both in the UK and overseas. M&G has provided services to customers for over 80 years and is one of the largest fund management companies in the country.

Key Fundamentals
Avg. Volume: 1,412,115 
Market Cap: £5.02 billion
PE Ratio: 4.55
Dividend Yield: 9.28%

M&G share price >

YearValue
20190
20180
20170
20160
20150

M&G 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. The company started paying dividends in 2020 and quickly rose to the top of the high-yielding list.

2. Evraz

Evraz (EVR) is a vertically integrated steel manufacturing and mining company. The company has headquarters in London and the majority owner is Roman Abramovich, a billionaire who is famous for owning the premier league football club Chelsea F.C.

Key Fundamentals
Avg. Volume: 490,162
Market Cap: £7.56 billion
PE Ratio: 19.7
Dividend Yield: 8.47%

Evraz share price >

YearValue
201975.00¢
2018118.00¢
201760.00¢
20160
20150

Evraz stock has an annual yield of 8.47% and pays dividends twice a year. However, Evraz does not have a long history of dividend payments and has only offered dividends since 2017. Additionally, the company has total liabilities of around 7.7 billion, although this has been decreasing consistently year on year.

3. Imperial Brands

Imperial Brands (IMB)​ is the fourth-largest tobacco company in the world when measured by market share. Founded in 1901, Imperial Brands owns popular brands such as Golden Virginia, RizLa and JPS.

Key Fundamentals
Avg. Volume: 256,863
Market Cap: £15.45 billion
PE Ratio: 10.25
Dividend Yield: 8.43%

Imperial Brands share price >

YearValue
2019206.57p
2018187.79p
2017170.72p
2016155.20p
2015141.00p

Imperial Brands currently offers an attractive dividend of 8.43%. IMB has managed to increase its dividend year on year since 2012, so there are good prospects for future dividend growth if it manages to maintain these increases.

4. British American Tobacco

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 is now the largest cigarette maker in the world based on net sales. Due to its international presence, it is listed on four stock exchanges.

Key Fundamentals
Avg. Volume: 411,525
Market Cap: £63.03 billion
PE Ratio: 11.02
Dividend Yield: 7.66%

British American Tobacco share price >

YearValue
201950.75p
201848.80p
20170
20160
20150

British American Tobacco only started paying out dividends in 2018 but has risen substantially to a healthy and competitive figure of 7.66%. With its development of electronic cigarettes, as buyers move away from the traditional kind, British American Tobacco is certainly a company to watch.

5. BP

Formerly The British Petroleum Company, BP​ is a multinational oil and gas company that offers a relatively high dividend yield, which can appeal to income investors. Founded in 1909, BP is the sixth-largest energy company in the world by market capitalisation and it is a very popular stock on our platform for energy trading​.

Key Fundamentals
Avg. Volume: 8,723,537
Market Cap: £61.61 billion
PE Ratio: 14.93
Dividend Yield: 7.62%

BP share price >

YearValue
201930.07p
201829.70p
201729.15p
201629.15p
201526.77p

As one of the largest-companies in the FTSE index, BP is offering a competitive dividend rate of 7.62% in comparison to other similarly positioned companies. ​However, it is worth noting that BP's former CEO, Bob Dudley, retired and was replaced by Bernard Looney in February 2020. Looney has ambitions to expand the company’s climate targets, which will result in some of the biggest changes the company has experienced in its 113-year history.

6. Standard Life Aberdeen

Standard Life Aberdeen (SLA)​ is an investment company that manages global assets including equities, real estate and private markets. SLA is the largest active asset manager in the UK and is headquartered in Edinburgh, Scotland. Standard Life Aberdeen was formed from the merger of Standard Life and Aberdeen Asset Management back in 2017.

Key Fundamentals
Avg. Volume: 941,592
Market Cap: £6.77 billion
PE Ratio: 28.54
Dividend Yield: 6.99%

Standard Life Aberdeen share price >

YearValue
201921.60p
201821.60p
201721.30p
201619.82p
201518.36p

Standard Life Aberdeen offers an attractive dividend yield of around 6.99% and an increasing company net worth. However, SLA is still a risky investment and is currently operating at a loss. Besides this, the current dividend rate has risen consistently since 2007.

7. Phoenix Group Holdings

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.

Key Fundamentals
Avg. Volume: 372,997
Market Cap: £6.89 billion
PE Ratio: 9.35
Dividend Yield: 6.78%

Phoenix Group Holdings share price >

YearValue
201946.80p
201846.00p
201745.14p
201641.75p
201540.52p

The dividend for Phoenix Group Holdings has been increasing steadily since its first payout in 2010. Despite its share price plummeting in the first quarter of 2020, it has managed to climb back 20% over recent months and it shows resilience to any further drops.

8. Legal & General

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.

Key Fundamentals
Avg. Volume: 1,663,180
Market Cap: £15.95 billion
PE Ratio: 8.77
Dividend Yield: 6.57%

Legal & General share price >

YearValue
201917.57p
201816.42p
201715.35p
201614.35p
201513.40p

Legal & General have been paying consistent dividends for years to investors, and it shows promising growth and revenue for the future. Although most of its operations are in the UK, the company also works on an international level.

9. Vodafone

Vodafone​ is a telecommunications company that operates primarily in the UK, as well as worldwide. It is the fourth-largest mobile operator group in terms of mobile customers, with almost half a billion in 2021. Vodafone represents one of the largest companies on the FTSE 100 index.

Key Fundamentals
Avg. Volume: 5,578,031
Market Cap: £34.12 billion
PE Ratio: 16.64
Dividend Yield: 6.28%

Vodafone share price >

YearValue
20199.00¢
201815.07¢
201714.77¢
201611.45p
201511.22p

Although Vodafone's annual revenue and earnings seem to be declining, it still pays its investors a healthy dividend of 6.28% and therefore, it deserves its spot on the top dividend-stocks list.

10. GlaxoSmithKline

GlaxoSmithKline (GSK) is one of the top pharmaceutical companies within the UK healthcare sector. It operates in multiple countries around the world and holds the title of the tenth-largest pharmaceutical company worldwide, being listed on both the LSE and NYSE.

Key Fundamentals
Avg. Volume: 2,560,745
Market Cap: £69.40 billion
PE Ratio: 14.63
Dividend Yield: 5.80%

GlaxoSmithKline share price >

YearValue
201980.00p
201880.00p
201780.00p
201680.00p
201580.00p

GSK is the fourth-largest company in the FTSE 100 when measured by market capitalisation and does not seem to be contested for its position. With a healthy dividend rate of around 5.80% and the fact that it is a healthcare stock, GSK offers a level of stability to investors.

Join a trading community committed to your success

How to pick high-yielding 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.

Best platform to buy 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 a large number of best-yielding dividend stocks to buy or trade through our online trading platform, Next Generation. Sign up below 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 mobile applications here.

Powerful trading on the go

Seamlessly open and close trades, track your progress and set up alerts

Summary

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

When investing in stocks with a high dividend rate 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.

Disclaimer: 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.

Join over 90,000 other committed traders

1

Open an account

Complete our straightforward application form and verify your account

2

Fund your account

Deposit easily via debit card, bank transfer or PayPal

3

Find and trade

One touch, instant trading available on 9,300+ instruments