Top UK Dividend Stocks Favored by Income Fund Managers
Income fund managers in the UK are increasingly favoring specific stocks as significant components of their portfolios. Recent data reveals two standout stocks among the UK Equity Income funds, GSK and Shell, both of which attract considerable investment.
Top UK Dividend Stocks Preferred by Income Fund Managers
GSK: A Leading Healthcare Choice
More than 76% of funds in the IA UK Equity Income sector include GSK, the healthcare company formerly known as GlaxoSmithKline, among their top ten holdings. This popularity is largely driven by GSK’s robust financial performance, with sales reaching £32.7 billion, a 7% increase before currency adjustments, in 2025. Speciality medicines contributed significantly, growing by 17%.
- Current share price: £20.97
- Price-to-earnings (P/E) ratio: 12.25x
- Dividend yield: 3.1%
BNY Mellon UK Income boasts the highest allocation to GSK, with a 7.7% position. Both CT UK Equity Alpha Income and CT UK Equity Income also maintain substantial stakes exceeding 7%.
Shell: The Oil Giant’s Growth
Another strong performer is Shell, appearing in more than half of the IA UK Equity Income funds’ top ten. The oil company has seen a 22.7% rise in its shares over the past 12 months, significantly influenced by geopolitical tensions affecting oil supply.
- Current share price: £35.09
- Price-to-earnings (P/E) ratio: 14.5x
- Dividend yield: 3.04%
Shell represents 6.4% of the FTSE 100 index and was the second-largest dividend payer of 2025. BNY Mellon UK Income leads in stock allocation towards Shell, with nearly 10%. UBS UK Equity Income and HSBC Income follow closely with allocations of 8.6% and 7.4%, respectively.
HSBC: The Banking Leader
HSBC, a global banking group, is also a major player, represented in the top ten holdings of 49% of the IA UK Equity Income sector. It is the largest dividend payer of 2025, making it a key preference among income-focused investors.
- HSBC’s popularity is driven by rising interest rates, enhancing profitability for banks.
- NatWest and Lloyds also rank among the largest dividend payers, appearing in about a third of these funds.
Underperforming Stocks
In contrast, the drinks brand Diageo has struggled in recent times, appearing in the top ten of only 3% of the IA UK Equity Income sector. The brand has seen a 31% decline in share price over the last year, prompting a halved interim dividend.
Furthermore, Playtech, an online gambling company, was notable as the 13th largest dividend payer last year but is absent from the top ten holdings of any IA UK Equity Income funds due to ongoing legal challenges.
Overall, income fund managers have gravitated towards GSK and Shell as secure investments, reflecting their strong dividend yields and market performance amidst evolving economic conditions.
