3 of my best ever dividend stocks: GlaxoSmithKline plc, Aviva plc and Royal Mail plc

However quickly interest rates rise, the yields on offer at the present time are hugely enticing by historical standards. In fact, it’s not just the yields that should be getting income-seeking investors excited, but also the prospects for rapid dividend rises. Here are three stocks that offer both of those attributes right now.


With a yield of 5.6%, GlaxoSmithKline (LSE: GSK) remains one of the highest yielding stocks in the FTSE 100. While its dividends are set to flatline over the next couple of years as it seeks to strengthen its financial position and raise its dividend coverage ratio, in the long run GlaxoSmithKline seems likely to increase shareholder payouts at a generous rate.

A key reason for this is the company’s long-term earnings growth prospects. GlaxoSmithKline has one of the most impressive drug pipelines in the pharmaceutical business, with it being well-diversified as well as large so as to reduce the risk of disappointment from worse-than-expected drug trial performance. This means that GlaxoSmithKline is likely to raise dividends at a rapid rate in future years, which alongside a high yield and a diversified business model equates to a top-notch income play.


Like GlaxoSmithKline, Aviva (LSE: AV) has an excellent yield that holds vast appeal even if interest rates rise at a brisk pace. Aviva currently yields 5.5% and while this is high, it’s likely to become even more enticing for the company’s investors as Aviva’s integration with Friends Life continues.

The combined company could dominate the life insurance market over the coming years and with the synergies from the deal, Aviva appears to be in a strong position to raise dividends over the medium term. In fact, as soon as next year Aviva is forecast to increase the amount it pays out to shareholders by 10.6% and such a rate of growth may not be surprising in future years too.

That’s because Aviva currently pays out just half of profit as a dividend and while some funds are required for reinvestment, Aviva could become more generous when it comes to dividends and boost shareholder payouts at a faster rate than profit growth.

Royal Mail

Royal Mail (LSE: RMG) continues to be a company of two halves. While its UK letters business is a rather disappointing division, its European segment is a growth driver that should allow the company to raise dividends in future years. As soon as next year Royal Mail is expected to increase shareholder payouts by 5.2% and even with that pace of rise the company’s payouts are still set to be covered 1.8 times by profit. This indicates that further growth is very much on the cards.

Allied to an upbeat dividend outlook is a yield of 4.3%, which is around 10% higher than the FTSE 100’s yield. And with Royal Mail having a price-to-earnings (P/E) ratio of just 12.5, it appears to offer excellent value for money as well as strong income potential.

A better dividend stock?

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Peter Stephens owns shares of Aviva, GlaxoSmithKline, and Royal Mail. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.