Best dividend paying stocks in the UK
I'm looking to invest in UK-based dividend-paying stocks and would love to hear your recommendations. Ideally, I'm after companies with a solid history of consistent dividends, reasonable yields, and good fundamentals for long-term holding.
Cheers!
1 Answer
Top UK Dividend Picks for 2025:
Rio Tinto (RIO) - Rio Tinto delivered strong H1 results with operating cash flow reaching $7.1 billion and underlying earnings reached $5.8 billion Best-Yielding UK Dividend Stocks in 2025 May 2025 - IG UK, providing excellent dividend cover for their payouts. Currently yielding around 5-6% with strong fundamentals in mining.
Phoenix Group (LSE: PHNX): Yielding 8.8% and boasting an exceptional dividend cover of 6.0, Phoenix is a leading player in insurance and retirement solutions, supporting reliable dividends.
British American Tobacco (BATS) - Despite regulatory headwinds, maintains one of the highest yields in the FTSE 100 at around 8-9%, with decent dividend cover from stable cash flows.
National Grid (NG.) - Utility companies offer defensive characteristics with regulated returns, typically yielding 4-5% with predictable dividend cover.
Unilever (ULVR) - Consumer staples giant with decades of dividend payments, currently yielding around 3-4% with strong international diversification.
BT Group plc BT.A, I think the current yield is 5.38%, dividend cover is 8.88x. Recent dividend increase; anticipates sustained revenue growth and strong cash flow.
Key Safety Indicators to Check:
Dividend Cover: Look for coverage ratios above 1.5x (earnings can cover dividend 1.5 times over)
Free Cash Flow: Ensure positive and growing free cash flow
Debt Levels: Manageable debt-to-equity ratios
Payout Ratios: Generally below 70% of earnings
Red Flags to Avoid:
UK dividend payments fell 4.6% in the first three months of 2025 with cuts from three income heavyweights to blame. Cuts from Vodafone Group The 20 most-popular dividend shares among UK fund managers highlight that even established companies can cut dividends, so always verify current financial health before investing.
Focus on companies with consistent earnings, strong balance sheets, and sustainable business models rather than chasing the highest yields, which can often signal underlying problems.