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Following ChatGPT blindly positively isn’t advisable, particularly in terms of making funding choices. Nevertheless, it may be a great tool when trying to find 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 arduous 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 under 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 finest to not take the whole lot ChatGPT says as gospel.
Phoenix’s whole dividend has been persistently hiked for a lot of years now — all the time an important signal. Even so, development has lagged inflation at round 2%-3%. The area wherein it operates can be very aggressive.
Nonetheless, I can consider worse picks to get the ball rolling.
Large money returns
Second on ChatGPT’s record 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 suitable route in current weeks.
It might appear the market likes all of the cost-cutting happening right here. A complete of £230m is predicted to be saved by the tip of 2025. Immediately’s (30 Could) 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 properly.
However this, M&G’s efficiency has been fairly erratic because it demerged from Prudential six years in the past. Any whiff of a protracted downturn in markets may cut back the charges it receives. The continued shift by many retail buyers into low-cost passive funds can 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 important choice for “a dependable revenue stream“, proper?
Effectively, 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 objects represented 17.5% of whole income in 2024 exhibits there’s loads of room left to develop. In contrast to 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 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.
