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 M&G 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 M&G 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.

Should you invest £1,000 in M&G 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 M&G made the list?

See the 6 stocks

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

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »

Investing Articles

Deutsche Bank reiterates Buy rating on 9.6% yielding FTSE 250 stock that was “most shorted in UK”

Our writer investigates why a major broker remains optimistic about a FTSE 250 stock that was once the most shorted…

Read more »

Investing Articles

2 things to remember when stock markets are turbulent

US trade policy has rattled the stock markets in New York, London and elsewhere. Our writer outlines a couple of…

Read more »