10 Best FTSE Dividend Stocks To Buy Now

In this article, we discuss 10 Best FTSE Dividend Stocks To Buy Now. 

Goldman Sachs Research predicts moderate growth for the UK economy in 2025, with GDP rising 1.2%. That is slightly below the Bank of England’s (BoE) 1.5% projection and the 1.3% consensus among economists. Moreover, growth is expected to slow as the year goes on, driven by trade uncertainties, tighter budgets, and changes in housing policies. However, inflation is likely to ease through 2025, which could lead to bigger interest rate cuts than the market expects. While most think the BoE will stop cutting rates at 4%, Goldman Sachs sees rates dropping further to 3.25% by mid-2026.

Building on this cautious economic outlook, fiscal policies are also expected to play a significant role in shaping growth. The UK’s autumn budget provided a near-term boost to demand but points to a consolidation in 2025, likely slowing growth later in the year. Inflationary pressures from public sector pay deals and higher taxes on services are expected to persist in the short term but should ease as wage growth slows and labor market tightness lessens.

Amid these broader economic challenges, UK investors may find some optimism in corporate dividends. AJ Bell’s latest Dividend Dashboard paints a positive picture for FTSE 100 dividends. Analysts expect payouts to grow by 1% in 2024 to £78.6 billion, followed by a 7% bump in 2025 to £83.9 billion, though still just shy of the 2018 record of £85.2 billion. This strong performance in dividends highlights a contrast to the broader economic challenges, offering a silver lining for investors. Share buybacks remain strong, with £49.9 billion already planned for 2024, on top of £52 billion last year. Combined with £11 billion in expected dividends from the FTSE 250 and £47.2 billion in takeovers, the FTSE 350 is set to deliver a whopping £189.7 billion in total cash returns. That works out to a cash yield of 7.7%, comfortably beating the Bank of England’s 5% base rate, the 3.92% 10-year gilt yield, and the 2.2% inflation rate.

Nevertheless, domestic companies are still grappling with significant headwinds, such as rising costs like National Insurance and minimum wage, all while operating in a sluggish economy. Investors are still favoring the US market, but falling interest rates could nudge some back toward UK stocks. Meanwhile, rising bond yields and pension plans shifting to UK equities might help stocks but could drive up government borrowing costs by reducing demand for gilts.

Our Methodology 

For this article, we used the iShares Core FTSE 100 UCITS ETF. The fund aims to replicate the performance of an index comprising the 100 largest companies in the UK. From this fund, we focused on picking prominent stocks with stable yields and strong dividend policies. The list below is ranked in the ascending order of dividend yield as of January 3.

At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)

10. Barclays PLC (NYSE:BCS)

Dividend Yield as of January 3: 2.72%

Number of Hedge Fund Holders: 21

Barclays PLC (NYSE:BCS) is a global financial services company with operations spanning the UK, Europe, the Americas, Africa, the Middle East, and Asia. It operates through two primary segments – Barclays UK and Barclays International. On November 1, Barclays PLC (NYSE:BCS) completed the £600 million acquisition of Tesco’s banking operations, including credit cards, personal loans, and lending balances, with an additional £100 million pending after regulatory adjustments. Tesco Bank’s 2,800 employees will transfer to Barclays, which has also secured a 10-year deal to sell financial products under the Tesco brand.

Barclays PLC (NYSE:BCS) reported strong financial performance in Q3, with a return on tangible equity of 12.3% for the quarter and 11.5% year-to-date. Total Q3 income was £6.5 billion, reaching £19.8 billion year-to-date, bolstered by a stable income mix and a favorable structural hedge. Barclays PLC (NYSE:BCS) ended Q3 with a strong CET1 ratio of 13.8%, within its target range.

The bank achieved £700 million in cost savings year-to-date, on track for a £1 billion target in 2024, and progressed its nonstrategic business disposals, including the sale of an Italian mortgage portfolio. Barclays PLC (NYSE:BCS) is also completing a £750 million share buyback, part of its goal to return £10 billion in capital by 2026.

At the end of Q3 2024, 21 hedge funds were bullish on Barclays PLC (NYSE:BCS), compared to 20 funds in the prior quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital was the leading stakeholder of the company, with 28.4 million shares worth $461.3 million. BCS is one of the best FTSE dividend stocks to look out for.

9. Unilever PLC (NYSE:UL)

Dividend Yield as of January 3: 3.37%

Number of Hedge Fund Holders: 22

Unilever PLC (NYSE:UL), founded in 1860 and headquartered in London, is a global consumer goods company operating in Asia Pacific, Africa, the Americas, and Europe. It offers products like hair and skincare, soap, fabric care, cooking aids, and ice cream. Unilever is one of the best FTSE dividend stocks to invest in.

In Q3, Unilever PLC (NYSE:UL) reported 4.5% underlying sales growth and 3.6% volume growth, marking the fourth consecutive quarter of positive volume growth. All business groups achieved positive volume growth, with Power Brands leading the way at 5.4%. Beauty & Wellbeing saw 6.7% sales growth, driven by strong performance in Health & Wellbeing. Personal Care grew 4.4%, and Ice Cream rose 9.8% due to operational improvements. Developed markets grew 6.9%, while emerging markets saw a 2.9% increase. However, growth was slower in regions like China and South East Asia. Turnover reached €15.2 billion, unchanged from the previous year, despite currency and disposal impacts.

In February 2024, Unilever PLC (NYSE:UL) announced a €1.5 billion share buyback program for the year. The first tranche of €700 million was completed in August, and the second tranche of up to €800 million began in September, set to finish in December 2024. The interim dividend for Q2 was increased by 3.0% to €0.4396, and the dividend for Q3 was maintained at this level.

Among the hedge funds tracked by Insider Monkey, 22 funds were bullish on Unilever PLC (NYSE:UL), compared to 21 in the last quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder in the company, with 16.7 million shares worth $1 billion.

8. Vodafone Group Public Limited Company (NASDAQ:VOD)

Dividend Yield as of January 3: 8.60%

Number of Hedge Fund Holders: 23

Vodafone Group Public Limited Company (NASDAQ:VOD) provides telecommunications services across Germany, the UK, Europe, Turkey, and Africa. It offers mobile and fixed connectivity, cloud and edge computing, cybersecurity, and IoT solutions for businesses. Vodafone Group Public Limited Company (NASDAQ:VOD) is one of the best FTSE dividend stocks to consider, with an impressive dividend yield of 8.60% as of January 3, 2025.

The £15 billion Vodafone-Three UK merger has recently been approved by the Competition and Markets Authority, with conditions to invest in a combined 5G network across the UK and cap certain mobile tariffs for three years. The merger will create the UK’s largest mobile operator, serving 27 million customers, and is expected to be completed in the first half of 2025. Vodafone Group Public Limited Company (NASDAQ:VOD) will own 51% of the merged entity initially, with the option to buy the rest later.

Vodafone Group Public Limited Company (NASDAQ:VOD)’s results are right on track with expectations, and the company is sticking to its full-year guidance. EBITDA grew by 3.8% in the first half of FY 2025, even with the challenges in Germany. The UK, other European regions, and Turkey all saw strong growth, which helped balance out slower service revenue growth in Q2 due to the MDU transition in Germany. Vodafone Group Public Limited Company (NASDAQ:VOD) is really focusing on improving customer experience, simplifying operations, and driving growth. In Germany, they have set up a new management team and made big investments in their network. On the other hand, Vodafone sold a stake in Vantage Towers for €1.3 billion. All these efforts are setting Vodafone Group Public Limited Company (NASDAQ:VOD) up for growth this year and even more acceleration heading into FY 2026.

Insider Monkey’s Q3 database suggests that 23 hedge funds were bullish on Vodafone Group Public Limited Company (NASDAQ:VOD), up from 19 funds in the prior quarter. Jim Simons’ Renaissance Technologies holds a stake worth roughly $88 million in Vodafone, making it one of its top shareholders.

7. British American Tobacco p.l.c. (NYSE:BTI)

Dividend Yield as of January 3: 8.12%

Number of Hedge Fund Holders: 24

British American Tobacco p.l.c. (NYSE:BTI) produces and sells tobacco and nicotine products globally, including vapor, heated, and oral nicotine products, as well as traditional cigarettes and smokeless products like snus and moist snuff.

British American Tobacco p.l.c. (NYSE:BTI) is focused on giving shareholders strong returns through its dividend and share buybacks, aiming for 3-5% revenue growth and mid-single-digit profit growth by 2026. The company is seeing progress in key areas, including its combustibles business in the US, where investments are paying off despite the challenges posed by illicit vapor products. British American Tobacco p.l.c. (NYSE:BTI)’s New Category products like Vuse, glo, and Velo are also doing well, with Vuse leading globally and seeing solid growth in regions like Asia Pacific, the Middle East, and Africa. New innovations, like the glo Hyper Pro, are helping improve performance. British American Tobacco p.l.c. (NYSE:BTI) is expecting a high cash flow conversion in 2024 and is maintaining strong cash generation, positioning itself for continued growth despite some hurdles in the market.

On December 19, British American Tobacco p.l.c. (NYSE:BTI) declared a $0.743 per share quarterly dividend. The dividend is distributable on February 6, 2025, to shareholders on record as of December 20. BTI has increased its dividend annually since 2018, making it one of the best FTSE dividend stocks on our list.

British American Tobacco p.l.c. (NYSE:BTI) was found in 24 hedge fund portfolios at the end of Q3 2024. Rajiv Jain’s GQG Partners is the biggest stakeholder of the company, with 13.70 million shares worth $501.3 million.

6. Diageo plc (NYSE:DEO)

Dividend Yield as of January 3: 3.41%

Number of Hedge Fund Holders: 26

Diageo plc (NYSE:DEO) is a global leader in the production, marketing, and sale of alcoholic beverages. Its diverse product portfolio includes scotch, gin, vodka, rum, tequila, and beer. Diageo plc (NYSE:DEO) ranks 6th on our list of the best FTSE dividend stocks, with a yield of 3.41% as of January 3.

Diageo plc (NYSE:DEO) reported net sales of $20.2 billion in 2024, a slight decrease from $20.5 billion in the previous year. Sales volume also declined to 230.5 million units in 2024, down from 243.4 million units in 2023. However, the company saw an increase in operating profit, rising to $6 billion from $5.5 billion last year. While earnings per share dropped from $1.96 to $1.73, net cash from operating activities rose to $4.1 billion, up from $3.6 billion in 2023. The annual dividend also increased to $1.0348 per share, compared to $0.9855 the previous year. Despite the lingering effects of COVID-19 and external macroeconomic and geopolitical pressures, the company has maintained its position in the beverage sector, with strong prospects for long-term growth and shareholder value.

Insider Monkey’s Q3 database shows that Diageo plc (NYSE:DEO) was part of 26 hedge fund portfolios, compared to 31 in the last quarter. William B. Gray’s Orbis Investment Management is the biggest stakeholder of the company, with 1.98 million shares worth $278 million.

5. Rio Tinto Group (NYSE:RIO)

Dividend Yield as of January 3: 7.42%

Number of Hedge Fund Holders: 30

Rio Tinto Group (NYSE:RIO) is a big player in the global mining scene, involved in everything from exploration to mining and processing minerals. The company works across four main segments – Iron Ore, where they mine iron ore, salt, and gypsum; Aluminium, which covers bauxite mining, alumina refining, and aluminum smelting; Copper, focusing on mining and refining copper, gold, silver, molybdenum, and other by-products; and Minerals, which includes mining borates, titanium feedstock, iron concentrate, diamonds, and even developing battery materials like lithium. It is one of the best FTSE dividend stocks to monitor.

Rio Tinto Group (NYSE:RIO) missed Q3 production estimates but remains confident in its long-term prospects, especially with its $6.7 billion acquisition of Arcadium Lithium. While iron ore production rose 1%, it fell short of expectations, and copper production dipped due to issues at the Kennecott mine. The company maintains its full-year shipping guidance but warns of rising costs due to inflation. However, Rio Tinto Group (NYSE:RIO) is progressing on growth projects like the Rincon lithium plant, Simfer iron ore mine, and Oyu Tolgoi copper mine. Despite the high premium, the Arcadium acquisition is seen as a strategic move to strengthen Rio’s position in the lithium market.

On December 5, RBC Capital Markets lowered its price target for Rio Tinto Group (NYSE:RIO) from £55 to £54 while maintaining a Sector Perform rating. This adjustment follows the company’s investor day, where it extended its 3% annual production growth target to 2033, partly due to lithium projects. Despite the revised price target, RBC expects Rio Tinto Group’s (NYSE:RIO) stock to perform in line with the sector.

According to Insider Monkey’s third-quarter database, 30 hedge funds were long Rio Tinto Group (NYSE:RIO), compared to 29 funds in the earlier quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder in the company, with 17.5 million shares worth $1.2 billion.

4. BP p.l.c. (NYSE:BP)

Dividend Yield as of January 3: 6.30%

Number of Hedge Fund Holders: 36

BP p.l.c. (NYSE:BP) provides carbon products and services across different sectors. The company is involved in producing natural gas, trading gas, and running wind power projects, hydrogen, and carbon capture facilities. BP p.l.c. (NYSE:BP) also trades renewable and non-renewable power, produces crude oil, and is active in retail fuel, EV charging, Castrol lubricants, aviation, B2B, and midstream businesses. Founded in 1908, BP p.l.c. (NYSE:BP) is headquartered in London. It is one of the best FTSE dividend stocks to watch out for.

BP p.l.c. (NYSE:BP) announced on January 2, 2025, that it has successfully started gas production from the GTA Phase 1 project, one of Africa’s deepest and most complex gas developments. The LNG project, located offshore Mauritania and Senegal, is expected to produce 2.3 million tonnes annually, helping meet global energy needs. Once fully operational, GTA Phase 1 will contribute significantly to the LNG market.

Year-to-date, BP p.l.c. (NYSE:BP)’s upstream production is up 3%, with a 5% increase in liquids production. BP’s plant and refining reliability were strong, at over 95% and 96%, respectively. In EV charging, the company saw 80% growth and sold 1 terawatt hour of electricity globally. BP p.l.c. (NYSE:BP) also has 23,000 barrels per day of biogas supply and expects to save over $0.5 billion in costs by 2025. Financially, the company announced a $1.75 billion share buyback and a $0.08 dividend per share. BP is exploring resources in Iraq, Azerbaijan, and Abu Dhabi, and the company also completed deals with Bunge and Lightsource bp.

Among the hedge funds tracked by Insider Monkey, BP p.l.c. (NYSE:BP) was found in 36 public stock portfolios, compared to 38 in the last quarter. Arrowstreet Capital is one of the top position holders in the company, with 5.2 million shares valued at $221.5 million.

3. GSK plc (NYSE:GSK)

Dividend Yield as of January 3: 4.67%

Number of Hedge Fund Holders: 38

GSK plc (NYSE:GSK) is a global healthcare company that offers vaccines for shingles, meningitis, flu, and respiratory syncytial virus, as well as medicines for HIV, cancer, respiratory diseases, and antibiotics. GSK plc (NYSE:GSK), with a yield of 4.67% as of January 3, is one of the best FTSE dividend stocks to buy.

In November 2024, GSK plc (NYSE:GSK) partnered with Vesalius Therapeutics in a deal worth up to $650 million to develop Parkinson’s disease drugs. The company will pay $80 million upfront, with additional payments for full rights to the program, which uses AI and human avatars to identify treatments. This expands GSK’s pipeline into neurodegenerative diseases.

GSK plc (NYSE:GSK) had a strong third quarter with 9% sales growth and 19% profit growth year-to-date, driven by Specialty Medicines and pipeline progress, particularly in oncology and HIV. The company resolved most of the Zantac litigation, removing a major risk. Vaccine sales were down, but both Arexvy and Shingrix maintained strong market shares. GSK plc (NYSE:GSK)’s operating profit and EPS grew 5%, with a 19% increase in operating profit year-to-date. The company generated £5.3 billion in cash flow, supporting investments and a 7% dividend increase. GSK also made strong progress in its pipeline, with plans for five major product launches next year.

Insider Monkey’s third quarter database indicates that 38 hedge funds were bullish on GSK plc (NYSE:GSK), compared to 36 funds in the earlier quarter. Fisher Asset Management, Arrowstreet Capital, and Renaissance Technologies were major shareholders of the company.

2. AstraZeneca PLC (NASDAQ:AZN)

Dividend Yield as of January 3: 2.24%

Number of Hedge Fund Holders: 42

AstraZeneca PLC (NASDAQ:AZN) is a biopharmaceutical company that focuses on developing and marketing prescription medicines. The company offers a wide range of products, including treatments for cancer, cardiovascular diseases, and rare conditions. AstraZeneca PLC (NASDAQ:AZN) is one of the best FTSE dividend stocks to consider.

In Q3, total revenue jumped 21% given the strong global demand for AstraZeneca PLC (NASDAQ:AZN)’s medicines, and core EPS increased 27% to $2.08. For the year so far, revenue is up 19%, and core EPS grew 11%. Every therapy area delivered double-digit growth, so the company has raised its full-year forecast, expecting high-teens growth for both revenue and EPS.

Globally, AstraZeneca PLC (NASDAQ:AZN) is seeing robust growth, especially in emerging markets outside China, which grew 30% year-to-date. Revenue is well-distributed – 43% from the US, 21% from Europe, and 14% from emerging markets outside China. To boost its US presence, the company is investing $3.5 billion in manufacturing and R&D, which is part of its 2030 growth plan. Moreover, net debt grew by $3.8 billion, driven largely by this year’s acquisitions and $4.6 billion in dividend payouts.

AstraZeneca PLC (NASDAQ:AZN) was found in 42 hedge fund portfolios at the end of Q3 2024, compared to 49 in the earlier quarter. Ken Fisher’s Fisher Asset Management was the leading stakeholder of the company, with roughly 10.5 million shares worth $816.5 million.

1. Shell plc (NYSE:SHEL)

Dividend Yield as of January 3: 4.27%

Number of Hedge Fund Holders: 48

Shell plc (NYSE:SHEL) ranks 1st on our list of the best FTSE dividend stocks. The London-based global energy and petrochemical giant has five business segments – Integrated Gas, Upstream, Marketing, Chemicals and Products, and Renewables and Energy Solutions. The company explores, extracts, and markets oil, natural gas, and natural gas liquids, while also producing fuels, petrochemicals, and low-carbon products.

Shell plc (NYSE:SHEL) is ramping up its investments in low-carbon energy, focusing on projects like expanding its e-mobility network across the EU, acquiring Nature Energy – Europe’s biggest biogas producer – and building two massive renewable hydrogen plants – a 100 MW facility in Germany and a 200 MW plant in the Netherlands. The company is also backing Northern Lights, the world’s first open-source carbon capture and storage (CCS) project under the North Sea. Between 2023 and 2025, Shell is planning to invest $10 to $15 billion in low-carbon solutions.

On December 19, Shell plc (NYSE:SHEL) distributed a quarterly dividend of $0.344 per share and $0.688 per American Depositary Share (ADS). The company intends to raise its annual dividend by about 4%, pending board approval and plans to allocate 30-40% of its cash flow to shareholders via dividends and share repurchase programs.

Fisher Asset Management, Eagle Capital Management, and Orbis Investment Management are leading shareholders in the company. Insider Monkey’s database indicates that 48 hedge funds were bullish on Shell plc (NYSE:SHEL), compared to 49 in the prior quarter. 

Overall, Shell plc (NYSE:SHEL) ranks first on our list of the best FTSE dividend stocks. While we acknowledge the potential of SHEL to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SHEL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

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