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Following ChatGPT blindly positively isn’t advisable, particularly relating to making funding choices. Nevertheless, it may be a useful gizmo when trying to find shares to purchase. With this in thoughts, I requested it for the three greatest high-yielding dividend shares within the UK.
Sky-high revenue
The primary title spewed out was life insurance coverage and pensions specialist Phoenix Group (LSE: PHNX). And it’s not laborious to see why.
Proper now, the FTSE 100-listed firm’s shares yield a monster 8.8% for 2025. By comparability, the yield of a fund that tracks the index as a complete is 3.4%.
Worryingly, the AI bot claimed the yield was 11.1%. However this doesn’t appear to have taken into consideration the good transfer within the share worth since April, due partially to the corporate surpassing analyst expectations on money technology and adjusted working revenue in its 2024 outcomes. As acknowledged, it’s greatest to not take every thing ChatGPT says as gospel.
Phoenix’s complete dividend has been constantly hiked for a lot of years now — all the time an excellent signal. Even so, progress has lagged inflation at round 2%-3%. The house wherein it operates can be very aggressive.
Nonetheless, I can consider worse picks to get the ball rolling.
Big money returns
Second on ChatGPT’s checklist was funding supervisor M&G (LSE: MNG). At 9.2%, its forecast dividend yield is even greater!
Like its top-tier peer, this eye-popping return is much more spectacular contemplating the share worth has solely been stepping into the fitting course in current weeks.
It could appear the market likes all of the cost-cutting happening right here. A complete of £230m is anticipated to be saved by the top of 2025. At this time’s (30 Might) information of a strategic partnership with Japanese life insurer Dai-Ichi Life — which can contain the latter taking a 15% stake in M&G — has additionally gone down effectively.
However this, M&G’s efficiency has been moderately erratic because it demerged from Prudential six years in the past. Any whiff of a protracted downturn in markets might scale back the charges it receives. The continued shift by many retail buyers into low-cost passive funds can also hinder income progress and the sustainability of dividends. The bot was quiet on these very actual dangers.
Dividend hero
Rounding of our trio was British American Tobacco (LSE: BATS). As ChatGPT highlighted, it boasts an enviable report of constantly elevating its annual dividend. This absolutely makes it an excellent possibility for “a dependable revenue stream“, proper?
Nicely, skilled Fools will know that these funds weren’t (and by no means could be) assured. Spreading cash round stays prudent, particularly as tobacco gross sales have been steadily declining in lots of international locations.
For its half, the agency has been transitioning to reduced-risk merchandise to help earnings and shield these coveted money handouts (the yield sits at 7.4%). The truth that income from Smokeless gadgets represented 17.5% of complete income in 2024 reveals there’s quite a lot of room left to develop. Not like the opposite shares talked about, the £73bn cap solely has to scrap it out with just a few different heavy-hitters too.
Once more, I don’t suppose ChatGPT has dropped a clanger right here. However the persistent menace of (extra) regulation — which wasn’t highlighted — means suggests revenue buyers ought to solely be utilizing the bot’s advice as a springboard for additional analysis.
