Top 40 High-Yield Blue-Chip UK Stocks: Summer 2023

dividend stocks Jul 10, 2023
Top 40 UK High-Yield Dividend Stocks

Unfortunately, good news is increasingly hard to find.

The UK is apparently teetering on the edge of a recession, the UK’s long-ticking mortgage time bomb is in the process of exploding, and the FTSE 100 has fallen back towards 7,000, where it has spent most of the last 25 years.

Gloomy indeed.

However, if you’re looking to invest in high-yield UK dividend stocks, then there is a silver lining: The UK’s position as Public Enemy Number 1 (at least as far as investors are concerned) has left both the FTSE 100 and FTSE 250 with an embarrassment of high-yield riches.

High single-digit dividend yields have become commonplace 

After falling back to 7,260, the FTSE 100’s dividend yield has increased to 3.9%, which is slightly above its 30-year average of 3.4%. That is one piece of good news, but if you focus on large-cap stocks with the highest forecast yields, the news gets even better, as many of them have yields far in excess of 5%.

For example, after the UK stock market’s recent decline, my list of high-yield UK stocks has an average forecast dividend yield of 6.8%, which is very impressive (you can see the full list at the bottom of this post).

30 of those 40 stocks have dividend yields above 5%, 23 have yields above 6%, and 17 are above 7%. Three stocks have a yield of more than 10%, and the highest yielder (Vodafone) is forecast to pay an 11% dividend.

Of course, whether or not those forecast dividends will be paid or not is another matter, but either way, the UK market is teeming with attractive high-yield stocks.

High-yield stocks are never going to be flavour of the month 

One thing you have to be aware of as an income-focused investor is that you are never going to be investing in today’s most popular stocks. So if you’re hoping to receive an attractive dividend from today’s hottest tech stocks or the latest ESG trend, you will be sadly disappointed.

High yields mean low valuation multiplies, and that means investing in companies that other investors want to avoid. In most cases, investors are avoiding these stocks because they're old, they're boring (at least at first glance), and they're not always aligned with modern ethical sensibilities.

For example, in the top half of my UK dividend top 40 list, you’ll find:

  • five natural resource extractors
  • four boring banks (i.e. not sexy fin-tech banks)
  • three utility suppliers
  • three life insurers
  • two tobacco companies
  • two housebuilders
  • And the almost 100-year-old M&G

Many of these companies are excluded from ESG-focused funds, and none of them are going to boost the average Millenial's pulse rate, let alone the average member of Gen-Z.

However, for those of us who are older and (perhaps) wiser, a collection of mature, established multi-billion pound companies with high single-digit yields is a good place to look for sensible long-term investments.

Be greedy when others are fearful

I’m going to end this post by repeating the quote I used in the last quarterly update because it still very much applies to the current environment:

“Every decade or so, dark clouds will fill the economic skies and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons.” - Warren Buffett

Here's the full list, which you can also download as a PDF. You can also find the latest version of this list on the Top UK Dividend Stocks page. 

No. Name (links to reviews) EPIC Index Sector Share Price Forecast Yield (%)
1 Glencore PLC GLEN FTSE 100 Industrial Metals and Mining £4.36 9.5
2 British American Tobacco PLC BATS FTSE 100 Tobacco £25.74 9.4
3 HSBC Holdings PLC HSBA FTSE 100 Banks £6.10 7.6
4 Vodafone Group PLC VOD FTSE 100 Telecommunications Service Providers £0.71 10.9
5 Rio Tinto PLC RIO FTSE 100 Industrial Metals and Mining £49.15 6.9
6 Legal & General Group PLC LGEN FTSE 100 Life Insurance £2.21 9.2
7 Imperial Brands PLC IMB FTSE 100 Tobacco £17.44 8.3
8 NatWest Group PLC NWG FTSE 100 Banks £2.33 7.6
9 Aviva PLC AV. FTSE 100 Life Insurance £3.82 8.8
10 Lloyds Banking Group PLC LLOY FTSE 100 Banks £0.43 6.5
11 National Grid PLC NG. FTSE 100 Gas, Water and Multi-utilities £9.99 5.8
12 Phoenix Group Holdings PHNX FTSE 100 Life Insurance £5.26 10.0
13 M&G PLC MNG FTSE 100 Investment Banking and Brokerage Services £1.84 10.8
14 Barclays PLC BARC FTSE 100 Banks £1.49 5.9
15 BT Group PLC BT.A FTSE 100 Telecommunications Service Providers £1.22 6.1
16 BP PLC BP. FTSE 100 Oil, Gas and Coal £4.54 4.7
17 Anglo American PLC AAL FTSE 100 Industrial Metals and Mining £22.01 4.9
18 Shell PLC SHEL FTSE 100 Oil, Gas and Coal £22.83 4.3
19 Barratt Developments PLC BDEV FTSE 100 Household Goods and Home Construction £4.03 8.3
20 Taylor Wimpey PLC TW. FTSE 100 Household Goods and Home Construction £1.00 9.3
21 GSK PLC GSK FTSE 100 Pharmaceuticals, Biotechnology and Marijuana Producers £13.16 4.3
22 Admiral Group PLC ADM FTSE 100 Non-life Insurance £20.29 5.9
23 abrdn PLC ABDN FTSE 100 Investment Banking and Brokerage Services £2.14 6.8
24 WPP Group PLC WPP FTSE 100 Media £8.14 5.0
25 Unilever PLC ULVR FTSE 100 Personal Care, Drug and Grocery Stores £39.91 3.7
26 United Utilities Group PLC UU. FTSE 100 Gas, Water and Multi-utilities £9.32 5.3
27 Tesco PLC TSCO FTSE 100 Personal Care, Drug and Grocery Stores £2.46 4.4
28 Schroders PLC SDR FTSE 100 Investment Banking and Brokerage Services £4.20 5.1
29 Investec PLC INVP FTSE 250 Banks £4.37 7.5
30 St James's Place PLC STJ FTSE 100 Investment Banking and Brokerage Services £10.69 5.3
31 DS Smith PLC SMDS FTSE 100 General Industrials £2.77 6.5
32 Intermediate Capital Group PLC ICP FTSE 250 Investment Banking and Brokerage Services £13.15 6.2
33 Harbour Energy PLC HBR FTSE 250 Oil, Gas and Coal £2.25 9.0
34 Smurfit Kappa Group PLC SKG FTSE 100 General Industrials £26.56 4.7
35 Sainsbury (J) PLC SBRY FTSE 100 Personal Care, Drug and Grocery Stores £2.71 4.8
36 Kingfisher PLC KGF FTSE 100 Retailers £2.24 5.4
37 ITV PLC ITV FTSE 250 Media £0.66 7.2
38 Severn Trent PLC SVT FTSE 100 Gas, Water and Multi-utilities £23.94 4.9
39 Dunelm Group PLC DNLM FTSE 250 Retailers £10.35 8.0
40 IG Group Holdings PLC IGG FTSE 250 Investment Banking and Brokerage Services £6.37 7.2

Note: This is a mechanical list that ranks FTSE 350 stocks by a combination of their market capitalisation (bigger is better) and forecast dividend yield (higher is better). It says nothing about my opinion of any particular stock or whether you should or shouldn't invest in them. It is just an easy way to boil the investment universe down to a short list of high-yield investment candidates. The data comes from SharePad.

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