Picture supply: Getty Pictures
Following ChatGPT blindly undoubtedly isn’t really useful, particularly on the subject of making funding choices. Nonetheless, it may be a useful gizmo when looking for shares to purchase. With this in thoughts, I requested it for the three finest 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 value 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 finest to not take every little thing ChatGPT says as gospel.
Phoenix’s complete dividend has been persistently hiked for plenty of years now — all the time an excellent signal. Even so, development has lagged inflation at round 2%-3%. The house through which it operates can be very aggressive.
Nonetheless, I can consider worse picks to get the ball rolling.
Large money returns
Second on ChatGPT’s checklist was funding supervisor M&G (LSE: MNG). At 9.2%, its forecast dividend yield is even larger!
Like its top-tier peer, this eye-popping return is much more spectacular contemplating the share value has solely been getting into the suitable route in latest weeks.
It might appear the market likes all of the cost-cutting occurring right here. A complete of £230m is anticipated to be saved by the top of 2025. Immediately’s (30 Might) information of a strategic partnership with Japanese life insurer Dai-Ichi Life — which is able to contain the latter taking a 15% stake in M&G — has additionally gone down nicely.
However this, M&G’s efficiency has been relatively erratic because it demerged from Prudential six years in the past. Any whiff of a protracted downturn in markets might cut back the charges it receives. The continuing shift by many retail buyers into low-cost passive funds might also hinder income development 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 file of persistently elevating its annual dividend. This absolutely makes it an excellent possibility for “a dependable revenue stream“, proper?
Properly, skilled Fools will know that these funds weren’t (and by no means might be) assured. Spreading cash round stays prudent, particularly as tobacco gross sales have been steadily declining in lots of nations.
For its half, the agency has been transitioning to reduced-risk merchandise to assist earnings and defend 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 exhibits 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 a number of different heavy-hitters too.
Once more, I don’t assume 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 suggestion as a springboard for additional analysis.
