In this article, we will take a look at some of the best FTSE dividend stocks.
In recent years, investors have increasingly shifted away from UK equities, favoring global stocks, particularly high-growth sectors like US technology. The UK stock market is shrinking at its fastest pace in over a decade, largely due to a wave of takeovers involving London-listed companies. Bloomberg data showed that around 45 firms have been delisted from the London market in 2024 through mergers and acquisitions, reflecting a 10% rise from last year’s total. This marks the highest level of delistings since 2010. At the same time, the value of deals involving UK companies has climbed 81% this year, surpassing $160 billion.
Over the last ten years, the British index has delivered an annual total return of 6%, significantly lagging behind the 13% return of the broader US market. Analysts attribute this weaker performance to sluggish earnings growth, political uncertainty within the UK, and the lack of a dominant technology sector. However, a key factor has been the sharp drop in valuations as investors have increasingly moved away from UK stocks. According to Goldman Sachs, the issue is not a lack of foreign investor interest—who currently account for roughly two-thirds of the UK market capitalization—but rather the low engagement of domestic investors in UK equities.
Also read: 10 Best Annual Dividend Stocks To Buy Now
That said, several factors seem to be contributing to a shift in investor sentiment. In November 2024, UK equity funds saw inflows after more than three years of continuous monthly withdrawals and a large sell-off leading up to the Budget. According to data from Calastone, retail investors invested a net £317 million into UK-focused stock funds that month. This marks a significant change, halting a streak of 41 months of net outflows, during which over £25 billion had been pulled from these funds since May 2021.
Analysts also believe that the UK stock market may be on the verge of recovery, although the exact timing and pace of this shift are unclear. In this context, dividend stocks are crucial. Focusing on stocks with growing dividends can offer stability and consistency across different market conditions. These stocks also provide long-term growth potential, compounding returns as share prices recover. The UK market offers some of the highest dividend yields among major markets, with the “Footsie” yielding 3.46%, and the FTSE 250 offering slightly lower but still attractive yields. This setup enables investors to focus on high-growth areas, like smaller companies, while enjoying the benefit of increasing dividends. According to BlackRock, UK market dividends are currently growing at a rate of 2-3%, roughly in line with long-term inflation. Companies with growing dividends typically have strong cash flows, allowing them to increase payouts over time.
Janus Henderson’s 2023 annual dividend report highlighted a significant increase in dividend growth, revealing that the UK paid out roughly $86 billion in dividends last year, up from $63.1 billion in 2020. Looking ahead, the UK’s stock market index is projected to distribute about £83.6 billion in dividends in 2025, marking a 6.5% rise from the £78.5 billion expected in 2024. Given this, we will take a look at some of the best FTSE dividend stocks.
Image by Nattanan Kanchanaprat from Pixabay
Our Methodology:
For this article, we scanned Insider Monkey’s database of 900 hedge funds as of Q3 2024 to find FTSE stocks that are also traded on US exchanges. Our focus was on companies that have strong dividend policies and consistently distribute dividends to their shareholders. The stocks are ranked in ascending order of hedge funds’ sentiment toward them.
Why are we interested in 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. Smith & Nephew plc (NYSE:SNN)
Number of Hedge Fund Holders: 10
Smith & Nephew plc (NYSE:SNN) is a British multinational medical equipment manufacturing company that offers a wide range of services and products to its consumers. In the third quarter of 2024, the company reported revenue surpassing $1.4 billion, marking a 4% increase from the same period last year. However, this growth didn’t inspire much confidence among investors. The company attributed slower performance in China as a key factor, which reduced overall growth by 190 basis points. This was mainly due to the impact of Value-Based Pricing (VBP) on the Sports division, along with weaker demand and necessary adjustments in the Recon segment. Over the past year, the stock has declined by nearly 9%.
In Q3 2024, Smith & Nephew plc (NYSE:SNN)’s Advanced Wound Management (AWM) segment remained the top performer, bringing in $422 million in revenue, a 6.5% increase from the previous year. Analysts pointed out the segment’s key strengths, including a wide and loyal customer base, a solid group of existing buyers, and its proprietary technology.
Though Smith & Nephew plc (NYSE:SNN) has declined in the past 12 months, the company is making steady progress in its transition to a higher-growth organization. The previously underperforming US Recon segment has started to show growth, and challenges in China are expected to ease by 2025. Ongoing improvements in operational and commercial metrics indicate that the company’s 12-Point Plan and cultural shifts are becoming key aspects of its operations.
Smith & Nephew plc (NYSE:SNN) has been making regular dividends to shareholders since 1937, which makes it one of the best FTSE dividend stocks on our list. The company offers a quarterly dividend of $0.144 per share and has a dividend yield of 2.95%, as of February 10.
9. HSBC Holdings plc (NYSE:HSBC)
Number of Hedge Fund Holders: 14
HSBC Holdings plc (NYSE:HSBC) is a financial services company, headquartered in London. The company serves millions of customers through its different businesses. It has recently revealed plans to scale down its M&A and equity capital markets businesses in Europe, the UK, and the US as part of a wider restructuring of its investment banking operations.
HSBC Holdings plc (NYSE:HSBC), while being a globally diversified company, generates a significant portion of its revenue from Asia, which contributes about half of its total earnings. The remainder comes from various global markets, mainly through services such as commercial banking and wealth management. The company has recently focused on expanding its presence in Asia.
For the third quarter, HSBC Holdings plc (NYSE:HSBC) reported $17 billion in revenue, marking a $1.1 billion increase from the same period last year and a $0.3 billion rise from the previous quarter, signaling positive business momentum. In addition, the bank announced $4.8 billion in shareholder returns, including a third interim dividend of $0.10 per share and a share buyback of up to $3 billion, which is expected to be completed by the time of the full-year results in February. With its solid performance in Q3 and relatively low price-to-earnings ratio, the stock seems undervalued and positioned for growth.
HSBC Holdings plc (NYSE:HSBC) currently offers an interim dividend of $0.10 per share and has a dividend yield of 5.53%, as recorded on February 10. It is one of the best FTSE dividend stocks on our list as the company has been making uninterrupted dividend payments to shareholders since 1997.
8. NatWest Group plc (NYSE:NWG)
Number of Hedge Fund Holders: 15
NatWest Group plc (NYSE:NWG) ranks eighth on our list of the best FTSE dividend stocks to buy now. The retail and commercial banking company that offers mortgages, loans, credit cards, and related services. The stock is delivering strong returns, surging by over 112% in the past 12 months. A key factor in the company’s success over the past year has been the unusually high interest rates, which enabled the bank to generate exceptionally strong returns on its loans. Throughout 2024, the bank consistently maintained its net interest margin—the gap between the interest it paid and earned—above 2%.
In the third quarter of 2024, NatWest Group plc (NYSE:NWG) reported a profit of £1.17 billion and a return on tangible equity (RoTE) of 18.3%. Customer deposits, excluding central items, rose by £2.2 billion, driven by higher savings across all three business sectors. The company anticipates maintaining a RoTE above 15% for 2024 and expects income, excluding notable items, to total around £14.4 billion. In addition, total income, excluding notable items, grew by £182 million (5.1%) from Q2 2024, mainly due to increased lending, deposits, and improved margins.
L1 Capital also highlighted this in its Q3 2024 investor letter. Here is what the firm has to say:
“NatWest Group plc (NYSE:NWG): NatWest is the largest commercial lender in the U.K. (20% share) and the second largest U.K. retail bank with ~13% of all mortgages. We see NatWest as best positioned in the U.K. Banking sector to benefit from improving margin trends, with topline growth supported by a rebound in U.K. housing and economic activity. Moreover, with significant buybacks owing to a strong capital position, NatWest should see ~8% EPS growth p.a. over the next three years vs. ~2% expected growth for CBA. Although CBA enjoys a more dominant market position in Australia vs. NatWest in the U.K., it appears overvalued in our view as it trades on ~24x FY25 P/E (historical highs) compared to only ~7x for NatWest.
NatWest (Long +10%) shares rallied on strong quarterly results including earnings ~28% ahead of consensus expectations and upgraded guidance driven by higher-than-expected revenues with net interest margin expanding 5bps. NatWest is the U.K.’s second largest retail bank with ~13% mortgage share and the U.K.’s largest commercial lender with ~20% share. In our view, NatWest leads the U.K. Banking sector with improving underlying operating trends, a superior mortgage margin trajectory and increasing interest rate hedge income. Importantly, management expects ongoing net interest margin expansion despite the impact of BoE rate cuts. We believe the company remains significantly undervalued, trading on an FY25 P/E multiple of only ~7x and a price to tangible book value ratio (P/TBV) of only ~1x. This is despite generating a 15% return on tangible equity and ~8% p.a. earnings growth over the next three years based on consensus expectations. We find these metrics and attributes very compelling, especially when compared to Australian banks.”
NatWest Group plc (NYSE:NWG) is a reliable dividend payer, with expectations to distribute ordinary dividends equaling around 40% of its attributable profit for FY24. At present, the company provides a semi-annual dividend of $0.1543 per share for a dividend yield of 3.96%, as of February 10.
7. Unilever PLC (NYSE:UL)
Number of Hedge Fund Holders: 22
Unilever PLC (NYSE:UL), established in 1860 and based in London, is a multinational consumer goods company with operations across Asia Pacific, Africa, the Americas, and Europe. The company provides a wide range of products, including hair and skincare items, soap, fabric care products, cooking aids, and ice cream.
Unilever PLC (NYSE:UL) has decided to abandon its plans to sell its €15 billion ice cream division to private equity firms and will now focus on achieving an independent public listing for the unit. Earlier in 2023, in March, the consumer goods giant announced its intention to spin off its ice cream business and gauge interest from private equity buyers for well-known brands like Ben & Jerry’s, Magnum, and Wall’s.
In the first half of 2024, Unilever PLC (NYSE:UL) saw a 4.1% increase in sales on an underlying basis, supported by three consecutive quarters of positive volume growth. Pricing adjustments aligned with expectations, showing a steady decline. The improvement in gross margins allowed the company to invest more in innovation, significantly boosting overall profitability. Operating profit reached €6.1 billion, marking a 17.1% year-over-year increase.
Unilever PLC (NYSE:UL) reported robust performance in its cash segment, with free cash flow reaching €2.2 billion during the period. By the end of the first half, the company’s cash and cash equivalents totaled €4.97 billion, an increase from €4.1 billion at the end of December 2023. It currently offers a quarterly dividend of $0.4755 per share and has a dividend yield of 3.2%, as of February 10.
6. British American Tobacco p.l.c. (NYSE:BTI)
Number of Hedge Fund Holders: 24
British American Tobacco p.l.c. (NYSE:BTI) is a manufacturing company, based in London. The company specializes in cigarettes, tobacco, and various other nicotine products. It is working to reduce its dependence on traditional combustible tobacco by focusing on smokeless alternatives, aiming for these products to make up 50% of its revenue by 2035. The company holds a strong position in the vapor market with its Vuse brand, which controls a 40.3% value share in key markets. In addition, BTI is expanding its footprint in the modern oral segment with its Velo brand. This strategic shift helps the company maintain its leadership in the growing market for tobacco alternatives, ensuring sustainable growth as demand for traditional smoking products declines.
In the first half of 2024, British American Tobacco p.l.c. (NYSE:BTI) saw a 6.8% drop in cigarette sales compared to the same period in 2023, following declines of 5.3% in 2023 and 5.1% in 2022. This persistent downturn significantly impacted the company’s stock, causing its market value to fall by over 40% at one point. However, similar to others in the industry, the company countered the effects of reduced sales by raising prices, which helped boost profits and led to a recovery in its stock price. Despite the decrease in sales volume, the addictive nature of nicotine has helped maintain a loyal customer base.
British American Tobacco p.l.c. (NYSE:BTI) stands out as one of the best FTSE dividend stocks on our list due to its consistent dividend track record. The company forecasts generating around £40 billion (roughly $50.57 billion) in free cash flow over the next five years, excluding dividend payouts. Moreover, it has consistently raised its annual dividend since 2018. The company currently pays a quarterly dividend of $0.7431 per share for an attractive dividend yield of 7.08%, as of February 10.
5. Diageo plc (NYSE:DEO)
Number of Hedge Fund Holders: 26
Diageo plc (NYSE:DEO) is a British multinational alcoholic beverage company with over 200 brands and sales in nearly 180 countries. In the past 12 months, the stock has declined by over 26%, mainly due to a tough macroeconomic environment. However, analysts are still optimistic about the company’s future growth. Diageo leads in categories such as scotch, gin, and vodka, and its scale enables it to invest heavily in marketing, ensuring its brands stay prominent and resilient against competition. In addition, the company’s size gives it a strategic edge, allowing it to acquire smaller rivals, enhance their value, and prevent them from becoming major threats.
Scotch whisky is a major contributor to Diageo plc (NYSE:DEO)’s success, with the company owning some of the world’s top-selling brands, including Johnnie Walker. Diageo commands a dominant 39% share of the market and holds nearly half of the Scotch whisky stock currently aging, a position competitors can’t easily match. The company’s beer business is also thriving, with Guinness, its famous Irish stout, gaining significant popularity among younger American consumers. Despite rumors that Diageo might consider selling its Guinness brand due to declining net organic sales, the company firmly denied these claims, stating it had no plans to sell. In addition, Diageo will maintain its 34% stake in Moet Hennessy, the champagne and cognac company, dispelling rumors about a potential divestment.
Diageo plc (NYSE:DEO) currently pays an interim dividend of $1.62 per share for a dividend yield of 3.82%, as of February 10. It is one of the best FTSE dividend stocks on our list as the company has been growing its payouts for 25 consecutive years.
4. Willis Towers Watson Public Limited Company (NASDAQ:WTW)
Number of Hedge Fund Holders: 42
Willis Towers Watson Public Limited Company (NASDAQ:WTW) ranks fourth on our list of the best FTSE dividend stocks. The London-based insurance company offers commercial insurance, brokerage services, and strategic risk investment solutions. In the fourth quarter of 2024, the company reported revenue of $3.04 billion, which showed an over 4% growth from the same period last year. Its income from operations also showed a 16% YoY growth at $901 million. Moreover, the company’s net income jumped 100% on a YoY basis at $1.2 billion.
Willis Towers Watson Public Limited Company (NASDAQ:WTW) is placing greater emphasis on data-driven solutions to assist with risk and capital management. In late October 2024, it introduced a machine-led solution designed to transform insurance practices. This new solution helps insurers and re-insurers enhance accuracy and efficiency in property and casualty reserving. In the past 12 months, the stock has surged by nearly 20%.
Willis Towers Watson Public Limited Company (NASDAQ:WTW) also reported a strong cash position in FY24. The company’s operating cash flow came in at $1.5 billion and its free cash flow amounted to $1.4 billion. It currently offers a quarterly dividend of $0.88 per share and has a dividend yield of 1.08%, as of February 10. WTW is one of the best FTSE dividend stocks on our list as the company has been raising its payouts for nine consecutive years.
3. AstraZeneca PLC (NASDAQ:AZN)
Number of Hedge Fund Holders: 42
AstraZeneca PLC (NASDAQ:AZN) is a multinational pharmaceutical and biotech company that specializes in a wide range of innovative medicines. In the fourth quarter of 2024, the company posted revenue of $14.9 billion, up 24% from the same period last year. The company successfully completed nine high-value Phase III studies during the year. Combined with rising demand for its medicines across key regions, this is expected to support its growth momentum into 2025. The company’s primary revenue driver remains the sales of its own medications. During the period, it saw notable growth in its oncology and respiratory and immunology segments, with sales increasing by 24% and 25% year over year, respectively. Meanwhile, its cardiovascular, renal, and metabolism (CVRM) division also performed strongly, recording a 20% increase.
AstraZeneca PLC (NASDAQ:AZN) also demonstrated a strong cash position in FY24. The company posted an operating cash flow of nearly $12 billion, up from $10.3 billion in 2023. Moreover, it ended the quarter with $5.4 billion available in cash and cash equivalents. During the year, it returned $4.6 billion to shareholders through dividends.
Parnassus Investments also highlighted this in its Q2 2024 investor letter. Here is what the firm has to say:
“AstraZeneca PLC (NASDAQ:AZN) gained after announcing robust first-quarter results and setting 2030 targets at an Investor Day that were above consensus expectations. We continue to believe that AstraZeneca’s robust pipeline and industry-leading innovation in oncology should support above-expectation revenue growth for the next several years.”
On February 6, AstraZeneca PLC (NASDAQ:AZN) announced a second interim dividend of $2.10 per share, bringing the total declared dividend for fiscal year 2024 to $3.10 per share, reflecting a 7% increase. The company also plans to raise the dividend further in fiscal year 2025. It is one of the best FTSE dividend stocks on our list as the company has been paying regular dividends to shareholders for the past 32 years. The stock supports a dividend yield of 2.13%, as of February 10.
2. Pentair plc (NYSE:PNR)
Number of Hedge Fund Holders: 47
Pentair plc (NYSE:PNR) is an American company specializing in water treatment. Although headquartered in the United States, it is legally incorporated in Ireland and maintains its tax residency in the United Kingdom. In the fourth quarter of 2024, it reported revenue of $973 million, reflecting a 1% decline from the previous year. Despite this, the figure exceeded analysts’ expectations by $2.05 million. The company’s Move, Improve, and Enjoy Water segments continued their strong performance, achieving record margins for another consecutive year following the nVent separation in 2018. Within the Flow segment, the Commercial division experienced further expansion, while adjustments were made to enhance the go-to-market strategy in the Industrial division. Meanwhile, Water Solutions saw continued growth in filtration sales, and the Pool segment returned to sales growth, driven by robust aftermarket demand.
Analysts see potential for growth in Pentair plc (NYSE:PNR)’s residential and industrial water technology solutions, as well as its residential pool products, particularly as lower interest rates drive higher consumer spending. This is especially relevant for pool products, where discretionary purchases are closely linked to housing market trends. In the past 12 months, the stock has surged by over 30%.
Pentair plc (NYSE:PNR) delivered solid cash flow performance, generating $767 million in operating cash flow and $693 million in free cash flow. The company currently distributes a quarterly dividend of $0.23 per share, following an 8.7% increase in December 2024. This latest hike extended its record of consecutive annual dividend increases to 49 years, which makes it one of the best FTSE dividend stocks on our list. On February 10, the stock’s dividend yield came in at 1.01%.
1. Linde plc (NASDAQ:LIN)
Number of Hedge Fund Holders: 63
Linde plc (NASDAQ:LIN) is an international chemical company that supplies various gases to industries such as healthcare, manufacturing, energy, food and beverage, chemicals, and electronics. The company delivered solid results in 2024, securing more than 59 small on-site contracts for clean energy supply and committing $2 billion to the DOW (Canada) project for low-carbon (blue) hydrogen production. The company invested a total of $4.8 billion in its operations. Annual sales reached $33 million, slightly up from $32 million in 2023, while the operating margin improved to 29.5%, marking a 190-basis-point increase from the previous year.
In 2024, Linde plc (NASDAQ:LIN) reported a robust operating cash flow of $9.4 billion. The company allocated $4.5 billion toward capital expenditures and distributed $7.1 billion to shareholders through dividends and share repurchases, after accounting for new issuances. The company currently pays a quarterly dividend of $1.39 per share for a dividend yield of 1.21%, as of February 10. It is one of the best FTSE dividend stocks on our list as the company has been rewarding shareholders with growing dividends for the past 31 consecutive years.
Driven by the growing demand for clean energy, particularly from the expanding electronics and EV battery markets, Linde plc (NASDAQ:LIN) expects a promising future as a key player in the environmental and clean energy sectors. The company remains dedicated to sustainability, investing heavily in clean energy and decarbonization initiatives. With strong financial results and an optimistic market outlook, Linde continues to solidify its position as a leader in the industrial gas industry.
Overall Linde plc (NASDAQ:LIN) ranks first on our list of the best FTSE dividend stocks. While we acknowledge the potential for LIN as an investment, our conviction lies in the belief that some 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 LIN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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