Archived article: Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
One of the UK stock market’s key attractions is the rich bounty of dividends on offer. There are companies with a history of returning copious amounts of money to shareholders and that makes the UK a fertile hunting ground for income investors.
At a headline level, the FTSE 100 yields 3.2% based on forecast payments. While 3.2% is less than you’d get from a best-buy cash savings account, if you do a bit of digging it is possible to get twice that amount for certain stocks. You could go even higher by looking at names in the FTSE 250 index.
Before we discuss the highest-yielding names on the market, it’s important to remember that companies offer no guarantees to pay dividends. They can cut or cancel them at any time.
Also, these are only estimates, and you might get less money in dividends than you first thought. It’s important to have a diversified portfolio so you are not reliant on one or a handful of stocks to do the heavy lifting.
Top dividend yields in the FTSE 100
Life insurance providers Legal & General and Phoenix are the top yielding stocks in the FTSE 100, the former offering a 9.2% dividend yield. For example, if you bought £10,000 worth of shares in Legal & General, you would expect to collect £920 in dividends over the following year.
| Highest yielding shares in the FTSE 100 | |
|---|---|
| Company | Prospective yield |
| Legal & General | 9.2% |
| Phoenix | 8.6% |
| M&G | 8.1% |
| Sainsbury | 7.2% |
| Land Securities | 7.1% |
| Londonmetric Property | 6.3% |
| WPP | 6.4% |
| Admiral | 6.4% |
| British American Tobacco | 6.2% |
| Mondi | 5.9% |
Source: AJ Bell, ShareScope. Data as of 1 October 2025
The life insurance industry collects premiums from customers every month and invests that money in lower-risk assets. The goal is to make a profit and have enough money to settle insurance claims.
There isn’t a big need to reinvest money in a life insurance business in the way you would expect from a manufacturing firm opening a new factory or an engineer upgrading its equipment. As such, life insurance firms can find themselves with surplus cash and that helps to fund generous dividends.
It would be fair to suggest the bulk of an investor’s returns from a stock like Legal & General would come from dividends rather than capital growth. That’s evident if you look at a five-year share price chart where the stock mostly traded in a narrow, sideways range.
A new addition to the list
A name rarely seen among the top dividend payers is Sainsbury's. However, it's currently on the list as it is scheduled to pay a one-off 'special' dividend following the sale of its banking operations. That payment on top of its normal dividend means it is trading on a prospective 7.2% yield.
Investors shouldn't assume that special dividends happen each year. They are generally paid when a business sells a large operation or has a windfall which it wants to share with investors.
Taylor Wimpey falls off the list
Earlier this year, housebuilder Taylor Wimpey was one of the top dividend payers in the FTSE 100. However, it’s been knocked off the list as it is no longer in the FTSE 100 and is now part of the FTSE 250 after its market cap fell below the threshold in September. Its share price has fallen over 30% in the last year, showing why looking beyond a dividend yield to other performance factors is an important piece of stock picking.
Top dividend yields in the FTSE 250
The highest yielding stock among mid-cap companies on the UK market is Ithaca Energy at 11.4%. Any yield above 9% would need extra investigation by potential investors, just to make sure this isn’t a one-off bumper payout or there is something odd going on. Companies aren’t normally that generous with dividends.
Ithaca Energy is an oil and gas producer in the UK North Sea. Its production increased by 50% in 2024 and its policy is to pay out 15% to 30% of post-tax operating cash flow in dividends.
Market forecasts imply it could pay out generous dividends this year and two years thereafter. The big unknown is how much it will get for oil and gas in the future, as commodity prices are unpredictable. That situation makes Ithaca a high-risk risk investment.
| Highest yielding shares in the FTSE 250 | |
|---|---|
| Company | Prospective yield |
| Ithaca Energy | 11.4% |
| Lancashire | 11.3% |
| Bluefield Solar Income Fund | 10.7% |
| Energean | 10.7% |
| Foresight Solar Fund | 10.6% |
| The Renewables Infrastructure Group | 9.8% |
| Harbour Energy | 9.7% |
| GCP Infrastructure Investments | 9.7% |
| Ashmore | 9.5% |
| Greencoat UK Wind | 9.3% |
Source: AJ Bell, ShareScope. Data as of 1 October 2025
The second highest dividend payer in the FTSE 250 is Lancashire, a specialty insurer focusing on risks in areas including property, energy, marine and aviation. Just like the life insurance companies discussed earlier; Lancashire has a strong history of paying high dividends due to the nature of its business.
Other generous dividend payers in the FTSE 250 include various investment trusts in the renewable energy and property space.
One word of warning. A high yield can sometimes be the result of a big drop in the share price, where the market is worried about something. If the shares are falling because the market thinks earnings aren’t going to be as strong as previously thought, that raises the prospect of a potential dividend cut down the line. In this situation, a weak share price and a high dividend yield can be a red flag.
Dan Coatsworth: Head of Markets
Dan Coatsworth is AJ Bell's Head of Markets. Dan has been with the company since December 2012 and has more than 18 years' experience in the industry, following the markets and all things investing. He...
