What Is a Good Dividend Yield, and Which Stocks Pay Most?

The short answer. For most established companies a sustainable dividend yield is 2% to 4%; above about 6%, the market usually doubts the payment will last. As of 2 October 2026, the highest-yielding companies we rate above 45/100 and above $2bn in market value are led by FSK at 21.32%. A yield rises when the price falls, so treat a high one as a question, not a reward.

What counts as a good dividend yield?

There is no single number, but there are bands that mean something:

Sector matters enormously. Utilities, tobacco, telecoms and REITs pay high yields structurally, because they have limited reinvestment opportunities and are legally or conventionally expected to distribute. A 5% yield from a regulated utility and a 5% yield from a software company are completely different objects.

Which stocks pay the highest dividends right now?

For a list chosen for quality first and yield second, see the best dividend stocks of 2026 and the dividend powerhouses screen.

Why is a high yield often a warning?

Yield is annual dividend divided by price. A company that pays £1 on a £25 share yields 4%. If the price halves to £12.50 and the dividend is unchanged, it yields 8%, and the company has become more troubled, not more generous. That is why the screen above requires a quality rating: the unfiltered top of a yield table is mostly companies about to cut.

How do you tell whether a dividend is safe?

1. Free cash flow cover. Does cash generated after capital spending exceed the dividend? Earnings cover can be flattered by accounting; cash cannot. A dividend paid out of borrowing ends the way you would expect.
2. Payout ratio. Above 80% of earnings leaves no room for a bad year.
3. Debt maturities. A wall of refinancing due next year competes directly with the dividend.
4. History. A company that has raised its dividend for twenty consecutive years has demonstrated something about its board's priorities.

Is a dividend better than a buyback?

Neither is inherently better; they are different distributions with different tax treatment and different signals. A dividend is a commitment: cutting it is a public admission, which makes it disciplined but inflexible. A buyback is discretionary, quietly reducible, and creates value only if the shares are bought below intrinsic value, which management is not conspicuously good at judging.

What this cannot tell you

• Whether the dividend is safe. Coverage, debt maturities and the board's intentions decide that, and none of them are in a yield figure.
• What you will actually receive. Withholding tax on foreign dividends, and your own tax position, can take a substantial bite.
• Total return. A 6% yield on a share that falls 10% is a loss.

Educational information, not financial advice. Every figure on this page is read from the source filings when the page loads rather than written into the article, so what you are reading is today's data and not a snapshot of the day it was published.