While the stock market’s gains this year may be diminishing the appeal of high yields, UK dividend investors still have a wide array of options available to them.
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Current Market Trends
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Investors focused on dividends can expect some exciting full-year results in March, all presenting attractive high yields. Let’s begin with Aberdeen Group (LSE: ABDN), which is set to announce its figures on Tuesday (3 March) — projected to deliver a yield of 6.6%.
The investment management firm has faced significant challenges over the past five years, experiencing a decline of 33%. However, it has been making a notable recovery since early 2025, having risen by 78% from its 52-week low recorded last April.
Dividend Investment Strategies
One of the primary issues that investors should be mindful of is the stagnation of the dividend, which has not increased over the last several years. Projections indicate that it is unlikely to change in the upcoming three years as well. During a time of elevated inflation, the real value of the Aberdeen dividend has been declining.
The Q4 trading update for January indicated a 9% increase in assets under management. Additionally, the investment platform experienced a surge of 500,000 new customers. Aberdeen appears to be a viable long-term income investment to contemplate — however, I am eager to see those dividends increase.
Reconstructing the foundation
Exploring High Yield Options
Taylor Wimpey (LSE: TW.) will provide a comprehensive update for 2025 on 5 March. This time, we anticipate a robust predicted yield of 8.3%. The house builder previously reported 10,614 home completions in the UK, excluding joint ventures, an increase from 9,972 in 2024. This figure falls within the management’s expected range.
The average selling price has increased to £335,000, up from £319,000. By the end of December, our order book stood at £1,864 million, a slight decrease from £1,995 million in the same month last year.
The net cash position has slightly decreased, from £565 million at the close of 2024 to £343 million. This may raise some concerns regarding the dividend. Analysts anticipate it will remain stable, but not increase over the next few years — and it will only be marginally supported by earnings by 2027.
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I believe the most significant risk is a potential dividend reduction, which I anticipate could lead to a decline in the share price. However, I think that long-term investors should seriously evaluate all the leading UK house builders.
Legal and General’s lucrative asset
Legal & General (LSE: LGEN) is set to report on 11 March, boasting a projected dividend yield of 7.9%, the highest among FTSE 100 companies. Analysts predict that earnings in 2025 will not be sufficient to sustain the dividend. However, they anticipate a return to adequate coverage in 2026, with further growth expected in 2027.
At the moment, my primary worry is the forward price-to-earnings (P/E) ratio sitting at 16. While this may appear favorable — and only slightly above the long-term average of the Footsie — it’s important to remember that this sector can be quite cyclical. I have doubts about whether the current legal and general share price has sufficient buffer to withstand any downturns in volatility.
For investors unconcerned about the fluctuations of the market in the short term, I view Legal & General as a promising long-term investment opportunity. I certainly consider it among my top choices for income generation at the moment. In fact, I’m contemplating increasing my investment in Aviva, which is in the same sector.
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