Finding the best dividend-paying UK shares to buy now to obtain a worthwhile passive income can be a difficult task. After all, share prices have made gains since their March lows, yet the economic outlook is uncertain.
As such, buying high-quality businesses with generous dividend yields that can grow in the long run could be crucial in obtaining a high income return.
With that in mind, here are four FTSE 100 stocks that appear to fit the bill. They could provide a relatively high income in 2021, as well as scope for above-inflation growth in the coming years.
High-yielding UK shares
British American Tobacco and GlaxoSmithKline are among the highest-yielding UK shares at the present time. They offer generous passive incomes compared to the FTSE 100’s 3.7% yield. BAT has a yield of 7.3%, while GSK’s dividends amount to 5.7% of its share price.
BAT recently released an encouraging investor update. It showed the company is making progress in growing its non-combustible product categories, such as e-cigarettes. It’s on track to meet its long-term goal of generating £5bn in revenue from non-combustibles.
In the meantime, its plans to become more agile may allow it to deliver strong dividend growth. Its capacity to raise cigarette prices may also produce a growing dividend in the coming years.
GSK also has an improving long-term future. As well as a higher yield than other dividend-paying UK shares, its passive income prospects could gather pace as its plans to split into two separate companies are realised.
This may increase its efficiency and strengthen its financial position relative to healthcare sector peers. In the shorter term, GSK’s defensive characteristics may mean that it has a solid income outlook relative to other FTSE 100 shares.
Dividend growth opportunities for a rising passive income
SSE and Unilever offer impressive dividend growth prospects relative to other UK shares. And that could mean they offer attractive passive incomes in the long run. For example, SSE has a dividend growth plan that covers the next few years.
It expects to raise dividends by at least as much as inflation in that time. Should a loose monetary policy cause a rapidly-rising price level, this could be a major benefit to income investors. Meanwhile, its 5.7% dividend yield is two percentage points higher than that of the FTSE 100.
Unilever is forecast to grow its dividends by around 6% next year as an improving global economic outlook takes hold. Its exposure to growing consumer markets across the emerging world means it could generate impressive profit growth that makes its 3.4% dividend yield increasingly attractive.
And, with the company having a diverse range of brands and exposure to a variety of countries, its potential to deliver a reliable passive income seems to be high.
Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.
Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.
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Peter Stephens owns shares of British American Tobacco, GlaxoSmithKline, SSE, and Unilever. The Motley Fool UK has recommended GlaxoSmithKline and Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.