5 top UK dividend shares with 8%+ yields

Could these be the best UK dividend shares for me to buy for my 2022 ISA? With such big dividends, I just might go for all five.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Close-up of British bank notes

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

FTSE 100 dividend payouts faltered during the pandemic. But now long-term confidence is returning, it looks increasingly like this year could deliver the best dividend returns since 2018.

Today, I’m looking at the five UK dividend shares with the biggest FTSE 100 yields, all at 8%, or better.

Persimmon leads the way with an 11% yield. Except for 2019, Persimmon has kept its dividend steady. However, the big yield has included a chunk of surplus capital being returned to shareholders.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

The housing market appears strong so far in 2022. But that’s before inflation and rising interest rates have had a chance to kick in. So there’s surely some threat this year, based on our economic outlook. And earnings in the sector can be cyclical.

But the UK’s long-term housing shortage means Persimmon remains a ‘hold’ in my portfolio.

Mining sector cash

With a predicted yield of 10%, Rio Tinto is in second place. The share price has barely moved over the past 12 months. But several years of growing earnings have helped push the dividend up to current levels.

The P/E looks low at around six, but that can be misleading. The mining sector is very cyclical, and stocks tend to look cheap around earnings peaks.

Still, I think commodities prices could remain strong for some time yet. And Rio could well be one of the best UK dividend shares around. I’m thinking of buying.

The financial services and asset management business can generate healthy cash flow to pay dividends. Right now, M&G looks good with a dividend yield of 8.5%.

There is a possibility of future stock market weakness, perhaps stemming from inflation and economic pressures. In turn, that could lead to investors withdrawing assets. Should that happen, M&G’s earnings might well be dented.

But the company is targeting £2.5bn in operating capital generation over the next three years. If it achieves that, I think the dividend should be safe. It’s another on my list.

Sector diversification

Imperial Brands has been among the top UK dividend shares for years. Right now we’re looking at a forecast yield of 8.3%. It should be well covered by earnings too.

One downside is that this is supposedly a dying business, as smoking becomes increasingly unacceptable. Earnings have edged down a little in the past couple of years too. But with growing trends in alternative ways of consuming tobacco, I reckon the Imperial Brands dividends should have a good few years left in them.

Finally, I come to Phoenix Group Holdings, with a predicted dividend yield bang on 8%. I like insurance, and currently own Aviva. I want another in the sector, and Phoenix is an option.

The company acquires life insurance and pension funds which are closed to new business, and manages those. I see that as a good way to spread, and reduce, the risk.

How the sector will handle today’s high-inflation economy is unknown, so there’s risk there. But the insurance business can generate strong cash flow over the long term.

UK dividend shares portfolio

Looking at these top UK dividend shares, I’m seeing good diversification across sectors. I do like the idea of spreading my 2022 ISA cash across the five.

This AI stock is becoming a digital juggernaut in a £ 12.5 billion market!

🤖 Curious about the next big player in AI? 🤖

Our leading industry analysts have uncovered a trailblazing content platform that's revolutionising the industry with its unparalleled generative AI technology, setting new standards in creativity and efficiency.

Care for a sneak peek?

Trusted by global giants like Amazon, Disney, and Netflix, this innovative company is not just transforming digital media with AI-generated 3D content but is also capturing a significant share of a £12.7 billion market!

With a remarkable 62% gross margin, indicating exceptional profitability and operational efficiency, this company's growth trajectory positions it as a must-watch for savvy investors.

Best of all, we're offering exclusive access to the name of this game-changing stock, absolutely free!

Discover your free AI stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft owns Aviva and Persimmon. The Motley Fool UK has recommended Imperial Brands. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Can the S&P 500 rise another 20% this year, or will the FTSE fight back?

Harvey Jones has been dazzled by the stellar performance of the S&P 500, like everyone else. Yet today he'd rather…

Read more »

Investing Articles

ChatGPT thinks this is the best FTSE 100 value stock to consider buying now

Can an AI bot help investors pick great value stocks? Paul Summers runs an experiment to find out and is…

Read more »

Investing Articles

After falling 10% last year, this passive income stock yields 9.9%, and I love it

The FTSE 100 is an absolute treasure trove for passive income seekers right now. It’s packed with top dividend stocks,…

Read more »

Happy young female stock-picker in a cafe
Growth Shares

These FTSE 100 shares boosted my portfolio in 2024. Can they do it again?

Having outperformed all his other FTSE 100 stocks last year, our writer considers whether these two stocks will do well…

Read more »

Investing Articles

2 cheap shares I’ve bought to build my wealth after 50

Harvey Jones says the FTSE 350 is packed with cheap shares right now. He's bought these two at a reduced…

Read more »

Value Shares

Are IAG shares the next Rolls-Royce?

Rolls-Royce shares have generated enormous returns for investors over the last two years. Could British Airways owner IAG be the…

Read more »

Investing Articles

Forget gym goals, here’s how to build wealth without maxing out ISA contributions in 2025

Our Foolish writer explains how Investors can start building wealth in 2025 by opening an ISA and investing in undervalued…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Here’s my stock market resolution for 2025

Stephen Wright’s sticking to his value investing principles this year in the stock market. But he’s also looking to minimise…

Read more »