Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
Best Dividend Stocks for UK Investors in June 2025 (My Top 5 Picks!)
Ruby Layram
4th Jun 2025
Investing in the best dividend stocks is a popular way to build a portfolio that generates passive returns. These stocks pay out small shares of revenue to investors, providing an additional way to make money on top of capital gains.
In the UK, there are hundreds of dividend-paying stocks to choose from. However, not all of these stocks will generate the returns that you might hope for.
Whilst some dividend stocks can be a great addition to your portfolio, others come with significant risk or simply aren’t worth buying.
Creating a strong dividend portfolio is all about spotting those hidden gems that provide a high dividend yield with a relatively low risk.
So, what dividend stocks are worth buying in 2025?
The exact answer to this question will vary depending on your investing strategy and goals. For example, some investors might have a higher risk appetite than others which means that they might be able to invest in risky yet high-paying dividend shares.
On the other hand, investors who want to take less risk might be better suited to more stable dividend stocks that offer a slightly lower (but still generous) yield.
It’s all about knowing your strategy!
Nevertheless, finding the top dividend stocks in the current market is an interest shared by most investors. Therefore, I thought I would share my own top picks! Here are 5 UK dividend stocks that I am watching in January 2025.
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A Bit of Helpful Info…
Before we jump into my top dividend picks, I thought it would be helpful to explain what a ‘dividend yield’ is – it will be mentioned quite a lot in this guide!
Dividend yield: This is the number that tells you how much a company will pay in dividends each year. The number is a ratio that represents the percentage of a company’s share price that is paid as a dividend. Yields between 2% and 5% are considered strong and anything above 5% is considered high.
The Best Industries for Income Stocks in June 2025
If you’re looking for the best industry to invest in for dividend stocks in January 2025, banking and insurance might just be your best option! With HSBC, Legal & General, and M&G delivering eye-popping yields over 9%, these sectors are shining bright for income-seeking investors.
One of the easiest ways to gain exposure to these stocks is to invest in an ETF that tracks UK banking and insurance stocks. The FTSE 100 Index is a good option – to fund tracks the largest UK companies (by market capitalization) including HSBC and Legal & General.
My Top 5 Dividend Stocks for April 2025
I recently did a bit of a spring clean of my investment portfolio and came across some appealing dividend opportunities. Here are 5 dividend stocks that I am watching right now.
1. Legal & General Group Plc (LGEN)
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Dividend Yield (as of June 2025): ~9.0%
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Sector: Life Insurance
Legal & General continues to be a cornerstone for income-focused investors. The company has consistently increased its dividend, with a 5% rise in the full-year payout to 21.36p per share in 2025. Its diversified business model, encompassing pensions, insurance, and asset management, provides stable cash flows and supports its generous dividend policy.
2. Phoenix Group Holdings (PHNX)
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Dividend Yield (as of June 2025): ~9.0%
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Sector: Life Insurance
Phoenix Group remains one of the highest-yielding stocks on the FTSE 100. The company has a strong track record of delivering sustainable dividends, supported by its robust capital position and cash generation capabilities. Its focus on closed life funds provides predictable income streams, making it an attractive option for dividend investors.
3. M&G Plc (MNG)
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Dividend Yield (as of June 2025): ~8.5%
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Sector: Asset Management
M&G has recently strengthened its position through a strategic partnership with Japanese insurer Dai-ichi Life, which includes a 15% stake acquisition and a $6 billion investment into M&G’s products over five years. This alliance enhances M&G’s distribution reach in Asia and supports its growth ambitions. The stock offers an attractive yield and is backed by strong analyst recommendations.
4. British American Tobacco Plc (BATS)
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Dividend Yield (as of June 2025): ~7.3%
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Sector: Consumer Staples
British American Tobacco continues to deliver solid dividends despite regulatory challenges and shifting consumer preferences. The company’s focus on “New Category” products, such as vapour and nicotine pouches, is gaining traction, contributing to its resilient performance. Its strong cash flows support a generous dividend payout, making it a reliable choice for income investors.
5. BP Plc (BP)
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Dividend Yield (as of June 2025): ~6.95%
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Sector: Energyfinance.yahoo.com
BP offers a balanced mix of yield, growth, and a strategic focus on energy transition. With $37 billion in adjusted EBITDA in 2024 and plans to return $14 billion to shareholders through buybacks and dividends, BP demonstrates strong financial health.
Its investments in renewable energy projects, including partnerships on offshore wind, position it well for the future.
How To Invest in Dividend Stocks Safely
Dividend stocks can seem like an exciting investment opportunity for investors who want to generate passive income. However, it is important to be aware that investing in dividend shares (just like any shares) comes with risk! Here are some top tips for reducing the risks that are involved with buying dividend stocks.
Don’t be fooled by high yields!
It can be tempting to fill your portfolio with high-yield dividends that promise excellent returns. However, high yields often come with high risk!
In some cases, it is not sustainable for a company to pay high dividend yields. If the company suddenly falls into financial trouble, it may have to reduce the yield or cut it completely.
It is sometimes better to focus on companies that offer an average yield and more stability.
Diversify
If you’ve been a Magpie reader for some time, you will have definitely heard us preaching the importance of diversification before.
Diversifying your portfolio is one of the best ways to reduce risk. It involves spreading your investments across different assets, instead of putting all of your money into one company.
Consider investing in a basket of different stocks in different industries.
There are a number of good dividend stock opportunities for UK investors in 2025. In this post, I have shared my top 5 picks that seem to be pretty sustainable right now. However, it is important to understand that market conditions can change and companies may not always be able to pay the dividends that they advertise. For this reason, you should do your own research into the company before making any decisions.
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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
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