When stock markets are under pressure, ISA investors often turn to the relative safety of dividend stocks. And analysts expect just 10 companies to pay out more than half the forecast FTSE 100 dividend cash. So it’s unsurprising people keep coming back to the same few champions.
The most recent forecasts suggest FTSE 100 stocks could pay a record total of £86bn in dividends in 2026. And if ISA investors nabbed all the cash, they wouldn’t have to pay a penny of it in tax.
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Consistent dividends
It looks like British American Tobacco (LSE: BATS) is likely to have ended 2025 among the year’s top five cash payers. So it’s no surprise it’s among the most popular UK dividend stock buys so far in 2026. With many shares under pressure from various geopolitical threats, the the share price has climbed over the past couple of years. Compared to many, markets see it as relatively safe, with a decent defensive moat.
The rise should hold the dividend yield back a bit. But even now, analysts still expect the stock to deliver 5.6% this year. And City forecasts show the annual cash returns rising, slowly but steadily, over the next couple of years too.
Clearly, the long-term risk for British American investors is the decline in popularity of tobacco. But February’s full-year results showed only a modest revenue dip of 1%. And the company added 4.7 million new customers to its smokeless brands. Smokeless products have already reached 18.2% of total revenue.
How that transition progresses, and how profits move over the timescale, adds risk. But I still think I see a decent future. And this has to be a stock for 2026 ISA investors to consider.
Soaring oil
Rising oil prices following the Iran conflict have helped push BP (LSE: BP.) shares up sharply in the past month. Is that a bit short-sighted? I think maybe it is, and it’s dropped the dividend yield to only 4% now. It’s still though, a bit above the FTSE 100 average.
In terms of cash, BP’s dividend’s in the top five biggest payouts expected for the year just ended. Oh, and it’s another of the most popular dividend stocks on investment platforms in the first few months of this year.
We do however, need to put the recent share price climb into context. Despite the win, the BP share price is still only roughly where it was around the year 2000. It had been struggling even before the pandemic — and those zero carbon plans launched at the same time — gave it a kicking.
Again, this is a company dependent on something most of us expect to fall out of use eventually. But again, I doubt the demise of hydrocarbons will come as soon as many people think. And BP hopefully has the clout to progress further in alternative energy sources itself.
Despite the risks in both these cases, I think I see two dividend stocks here that are well worth considering.
