10%+ dividend yields! 3 top dividend stocks to consider in 2025

Considering these high-yield UK dividend stocks could be the key to unlocking a huge long-term passive income, Royston Wild explains why.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Close-up of British bank notes

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Searching for the greatest high-yield dividend stocks to buy? Here are three worth further research whose forward dividend yields smash the FTSE 100 average of 3.6%.

M&G

At 10.1%, financial services provider M&G (LSE:MNG) offers the second-largest yield on the Footsie today.

Companies with double-digit dividend yields often come with danger. Such high yields can signal financial distress, an unsustainable dividend, or a falling share price. Some or all of these may signal deeper issues with the business.

Should you invest £1,000 in Vistry right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Vistry made the list?

See the 6 stocks

However, M&G doesn’t fall into any of these categories, in my book. It’s raised dividends each year since it was spun off from Prudential in 2019, and looks in good shape to continue this.

A Solvency II capital ratio of 210% as of June implies it remains in good financial health. This gives it enough scope to keep paying large dividends while investing for growth.

I think M&G could deliver huge long-term returns as demographic changes boost demand for wealth and retirement products. I’m also encouraged by its plans to build the Asset Management and Wealth divisions, areas which are building a head of steam.

Remember, though, that profits may come under pressure in the near term if interest rates fail to fall significantly and consumer spending remains under pressure.

Global X Nasdaq 100 Covered Call ETF

By investing in a basket of assets, the Global X Nasdaq 100 Covered Call ETF (LSE:QYLD) can help investors spread risk while targeting a market-beating passive income.

For this financial year, this exchange-traded fund (ETF)‘s dividend yield’s a huge 10.9%.

As its name indicates, the fund buys stocks on the Nasdaq 100 and sells covered calls on them. The income it generates is then distributed to shareholders in the form of dividends.

There are plenty of covered call funds to choose from today. What I like about this one is that it allows investors to own tech growth shares like Nvidia and Tesla while also delivering a substantial passive income.

On the downside, the fund’s focus on growth shares leaves it vulnerable to underperformance during economic downturns. Yet I still think it’s worth serious consideration from long-term investors.

SDCL Energy Efficiency Income Trust

In an era where cutting energy usage is gaining increasing importance, the SDCL Energy Efficiency Income Trust (LSE:SEIT) has the potential to also deliver blowout returns. With a 12% forward dividend yield too, income chasers in particular should give it special attention.

SDCL’s trust is extremely diversified, which allows it to absorb shocks at group level and continue paying large dividends. The business — which has raised shareholder payouts each year since its initial public offering in 2018 — invests across multiple sectors like healthcare, retail and data centres across the globe.

The threat of interest rates staying at higher-than-normal levels shouldn’t be taken lightly by investors. Yet I believe the danger this poses to earnings is more than baked into its rock-bottom valuation.

Trading at 52.7p per share, the trust’s dealing at a near-40% discount to its estimated net asset value (NAV) per share.

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended M&g Plc, Nvidia, and Tesla. 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.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

Is the FTSE 250 about to surge by 45%?!

The FTSE 250’s trading at a massive discount versus historical levels. Could the underappreciated growth index enjoy an upward correction…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Forecast: here’s how high can the FTSE 100 could climb in 2025

The FTSE 100’s already up over 6% since the start of the year as consumer spending starts to rise, but…

Read more »

Investing Articles

Up 30% in weeks, does the BAE Systems share price still offer value?

The BAE Systems share price has been on a tear over the past couple of months. This writer sees limited…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Hunting for shares to buy as the market trembles? Remember this!

After a choppy week in global stock markets, our writer goes back to basics in his hunt for bargain shares…

Read more »

Investing Articles

3 simple principles to help build wealth in an ISA

As a new tax year opens up new ISA allowances for many investors, our writer shares a trio of things…

Read more »

Investing Articles

US trade tariffs: what they could mean for UK shares like Ashtead, Compass Group, and Experian

US trade tariffs continue to rock global markets, and the UK is no exception. Our writer considers how a new…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Dividend Shares

The Trump slump has smashed these FTSE 100 shares!

After a rough week for US and UK shares, investors have been shaken. But now these FTSE 100 stocks have…

Read more »

Investing Articles

£10,000 invested in Rolls-Royce shares 5 years ago is now worth…

Rolls-Royce shares have been on fire since April 2020. Part of this is the result of pandemic restrictions lifting, but…

Read more »