Savings account interest rates have risen significantly. However, they’re still well below some of the yields offered by dividend stocks on the London Stock Exchange (LSE).
With that in mind, here are five LSE shares with yields over 8% right now.
First up is global banking giant HSBC. It’s forecast to pay out 62.2 US cents per share in dividends for 2023. That puts the prospective yield at 8.4% at today’s share price and exchange rate.
Banks can be volatile stocks. That’s because they’re exposed to the global economy. However, I like the risk/reward here. For the first half of 2023, the group delivered a strong performance and management said it’s confident about the future.
Legal & General
Next, we have insurer Legal & General. The 2023 dividend forecast here is currently 20.3p per share, translating to a yield of about 9.3%.
Now, a very high yield can sometimes be a sign a dividend cut is on the horizon. However, that doesn’t appear to be the case here. Recently, the company raised its H1 payout by 5%. It also said it plans to keep increasing its dividend by 5% a year in the medium term.
Given the company continues to hike its payout, I think the stock is worth considering as an income play.
Another insurer with a monster payout is Aviva. Currently, its 2023 dividend forecast is 32.4p per share, equating to a yield of about 8.6%.
However, Aviva’s long-term dividend track record is a little patchy. Over the last decade, for example, the company has reduced its payout on several occasions.
But in recent years, the company has undergone a massive transformation programme. As a result, it’s now far more streamlined than it was.
This leads me to believe the shares are worth a look now.
British American Tobacco
Turning to the tobacco industry, there’s now a big payout on offer from British American Tobacco.
Currently, analysts expect the company to reward shareholders with a cash distribution of 239p per share for 2023. That puts the yield at 9.4%.
In today’s health conscious, ESG-focused world, British American Tobacco obviously faces some challenges. A huge debt pile (£37bn at 30 June) adds further complications.
However, the stock does look cheap right now. So it could turn out to be a decent investment from here.
Finally, we have telecoms giant Vodafone. It’s currently expected to pay out 8.2 euro cents per share in dividends for 2023. That equates to a yield of about 9.9%.
Now last year, Vodafone paid out 9 euro cents per share in dividends. So the forecast here suggests a lot of analysts believe a cut is coming. This adds uncertainty.
However, on the plus side, the company is working hard to improve its performance. And a recent trading update showed its plan could be working as revenue for Q2 was up 3.7% year on year.
In light of this top-line growth, I think the stock could be worth a closer look.
Investing in high yielders
It’s worth pointing out that dividends are never guaranteed. Every stock has its own unique risks and analysts’ forecasts aren’t always accurate.
Therefore, diversification is crucial when investing in high yielders.
Those looking for more income investing ideas can find plenty right here at The Motley Fool.