Searching for the best dividend shares to buy? You might want to consider starting on the UK stock market. It’s packed with mature market leaders with diverse revenue streams and strong balance sheets, the perfect formula for strong and sustained passive income.
Of course, dividends are never guaranteed. Even the strongest blue-chip businesses can slash, delay, or cancel payouts when crises pop up. That’s why smart income investing demands more than just searching for the biggest yield. It takes careful research to avoid potential traps and worse-than-expected dividend income.
I’ve done some digging to find the best rock-solid dividend stocks to consider. Ready to see which ones made the cut?
Top trusts
Real estate investment trusts (REITs) can be robust dividend payers over the long haul. This is thanks in part to sector rules stating at least 90% of annual rental profits must be paid to shareholders.
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Two top ones to consider on the UK stock market today are Supermarket Income REIT and Grainger. Yearly dividends at these investment trusts have risen for the last seven and four years respectively. Their yields for the current financial year are a healthy 7.2% and 4.7% too.
Their focus on defensive industries means I’m confident they’ll remain solid dividend payers even if the global economy suffers a shock. Supermarket REIT focuses on food retail, as you may expect. Grainger is Britain’s largest-listed residential landlord with roughly 11,100 homes on its books.
Interest rate shocks that raise borrowing costs and hit net asset values may trouble the businesses at any time. But on balance, investors seeking dividend shares to buy should give both REITs serious consideration.
2 FTSE 100 heavyweights
M&G and Phoenix Group (LSE:PHNX) are among the most popular dividend stocks on the FTSE 100. They’ve proven highly dependable even during periods of extreme economic crisis — dividends at M&G have grown every year since it was spun out of Prudential in 2019. Phoenix has raised cash rewards for nine years on the spin.
What’s more, they’ve long offered dividend yields that tower above the UK average. Even after recent share price gains they keep offering excellent bang for your buck. Phoenix’s forward dividend yield is 7.7%; M&G’s comes in at 6.8%.
But as I say, past performance isn’t always a reliable guide to future returns. So can these FTSE dividend heroes keep delivering market-beating passive income? Worsening economic conditions could cause earnings and share price bumps, but I’m confident these companies will continue raising payouts over 2026 at least.
This is thanks to their cash-rich balance sheets. Phoenix’s Solvency II capital ratio was 175% as of June, latest financials show. M&G’s was even stronger at 230%.
Over the longer term, I think they’ll keep delivering large and growing dividends as the financial services sector expands. I expect, for instance, Phoenix’s earnings to grow steadily as an ageing population supercharges pensions demand.
