The first-quarter earnings season is more or less wrapped up for the UK’s largest dividend-paying stocks but investors will be forgiven for thinking more about tariffs than their quarterly, six-monthly or yearly dividends.
Of our 14 elite income stocks, five have updated the market: Unilever ULVR, Croda CRDA, GSK GSK, WPP WPP and Reckitt RKT. At this stage of the year, with most companies just one quarter of the way into the financial year, investors are focused more on profit guidance for the full year than cash distributions. In a “normal year,” this is usually uncontroversial. But with the full impact of tariffs yet to be felt on the UK and the global economy, it seems that the next quarter’s earnings will be more insightful. This is especially pertinent as many of these companies’ quarterly updates were made before the US-UK trade deal, announced on May 8.
Upcoming UK Dividend Payments
Lloyds Banking Group, final dividend (2.11p), paid May 20.
Croda, final dividend (63p), paid May 28
Reckitt Benckiser, final dividen (121p), paid May 29
UK pharmaceuticals had been expecting harsh tariffs but have since been promised “preferential treatment” by the Trump administration. For the UK’s second-largest pharma stock, GSK, the latest update was business as usual: GSK declared a 16p dividend for the first quarter, the same as Q4. The total expected payout for 2025 is 64p, which would be higher than the 61p paid out in 2024.
Longer-term GSK investors will recall that, prior to the split with consumer healthcare firm Haleon HLN, they received a standard 80p per share. Year to date the shares are largely unchanged, but the stock yields around 4.50%. Rival AstraZeneca AZN, the largest company in the Morningstar UK Index, has put in a similar share price performance but yields 2.50%.
Impact of Tariffs on UK Income Stocks
The GSK chief executive, Emma Walmsley, said in the analyst call accompanying the earnings that the company is prepared for tariffs.
Another dividend stalwart claiming to be tariff-ready is consumer goods giant Unilever.
“The direct impact of tariffs on our profitability is expected to be limited and manageable,” the firm said.
“All this being said, we are conscious that the macroeconomic environment, currency stability and consumer sentiment remain uncertain and we will be agile in adjusting our plans as necessary,” Unilever added.
Shares are marginally lower than at the start of the year and the stock yields around 3.30%. In euro terms, the quarterly payout will be the same at EUR 0.4528 and will be paid on June 13. In sterling terms the dividend will be slightly higher, at 38.87p, because of currency movements in that time- with the euro strengthening. Year on year the payout is higher than Q1 2024, at EUR 0.4528 versus EUR 0.4268.
In terms of tariffs, advertising giant WPP said it’s not directly affected, but is mindful of the impact on clients and the wider economy. As this was a trading update from WPP, there was no new dividend information, but the stock pays every six months: in 2024 it paid 39.4p, the same as the year before.
Consumer healthcare stock Reckitt Benckiser RKT updated the market on April 23 and maintained annual profit guidance. The company’s final dividend of 121.70p (£1.21) will be paid on May 29, and that’s higher than the 115.90p paid in the same period in 2024. The stock pays dividends every six months, every May and September.
The tobacco giants are yet to report, with British American Tobacco BATS due to release its half-year report on July 31. The company’s payment cadence is quarterly, and the last dividend was 60p, paid on May 7. In 2024, the company paid £2.36 in total, from £2.31 the year before.
Are There UK Dividend Aristocrats?
The stock was one of the rare UK dividend payers not to cut its payout during the 2020 “great reset” for FTSE 100 dividends: it can now boast seven consecutive years of dividend increases. Another year of increases should see the stock make it into the SPDR® S&P® UK Dividend Aristocrats UCITS ETF UKDV, which features UK stocks with at least seven consecutive years of dividend growth. From our screen, Unilever, Croda, Diageo, Reckitt Benckiser make the grade as “dividend aristocrats.” This label may be useful for some investors, but it’s worth highlighting that in the US, the definition covers 25 years of consecutive increases. In Europe, there are five stocks that make the grade, while there are 60 in the S&P 500.
Imperial Brands IMB, the FTSE 100’s other large tobacco stock, also pays quarterly: the latest payment was made on March 31 and the next is likely to be at the end of June. Half-year results were on May 14. The half-year dividend was increased to 80.16p, from 44.90p in 2024, while Chief Executive Stefan Bomhard announced his retirement later this year. Shares lost more than 6% on the day of the announcement.
Moving down the list, Diageo DGE provides a Q3 trading update on May 19, ahead of full-year results on August 5. Its interim dividend of 31.48p was paid on April 24.
New Tax Year: Current UK Tax Rules on Dividends
The new tax year started on April 6, 2025 so investors and savers are looking to use their allowances for the current year. Existing rules that affect dividend investors:
There is no income tax payable on dividends paid on stocks held within an ISA. Every eligible adult can currently save or invest up to £20,000 into an ISA in the current tax year. The Treasury is reviewing the cash ISA allowance, but the stocks & shares ISA, which dividends are likely to be paid into, is expected to remain unaffected if there are any changes.
Outside of that ISA wrapper, the tax-free dividend allowance is £500 in the current tax year. Dividend tax rates are 8.75%, 33.75% and 39.35% depending on your tax bracket.
The tax-free CGT allowance is currently £3,000. Outside of that, CGT tax was increased from 10% to 18% for basic-rate taxpayers and from 20% to 24% for higher-rate taxpayers in the 2024-2025 tax year and in the current tax year.
Methodology for UK Dividend Stock Screen
To make it on to our monthly list, FTSE 100 companies need now to have a Narrow or Wide Morningstar Economic Moat Rating, pay a dividend, and have a forward yield of 3% or more. This is below the Bank of England base rate, which stands at 4.25%. We changed our methodology in 2022, introducing a forward dividend yield hurdle of 3%.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
