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When considering UK stocks for passive income, investors often seek out well-established businesses with long track records of dividend growth. These may not be the highest-yielding dividend stocks but rather ones that promise consistent returns.
For investors who rely on dividend payments for regular income, stability is key. When dividends are cut or reduced, the unexpected loss of income can be disruptive.
Here are three reliable UK dividend stocks that often pop up in the portfolios of income investors.
Tesco
The UK’s favourite high street grocery chain suffered minor losses this week after a glitch affected its online delivery service. However, the stock remains up 52% over the past two years, reflecting an impressive recovery after suffering losses in 2021 and 2022.
Major US broker Citi Group recently reiterated its Buy rating for Tesco (LSE: TSCO), with a price target of £4.25.
In 2024, revenue grew 4.39% to £68.19bn and operating profit increased 88.12% year on year to £2.8bn. The growth underlies strong performance for the company, reflected in an 11% dividend increase to 12p per share. It now sports a yield of 3.33%, that, while not particularly high, has been growing steadily.
In December 2024, its market share hit a seven-year high but it still faces stiff competition in the UK retail sector. Rivals like Asda and Lidl all offer low-cost alternatives that could regain favour in a high-inflationar environment.
Unilever
The global consumer goods giant Unilever (LSE: ULVR) is a popular option for both its income and defensive properties. Like Tesco, its yield seldom rises above 4% but it experiences low volatility even during economic downturns.
While its performance lags that of US rivals like Procter & Gamble, its diversified product portfolio and global reach provide a stable foundation for dividend income. Some of its top-selling brands include Dove soap, Magnum ice cream, and Hellmann’s mayonnaise.
Still, it must maintain a careful balance between profits and low prices or it could risk losing market share to competitors. The outcome of US trade tariff decisions could also threaten its future profits.
Dividend-wise, it’s solid, making reliable payments for over 20 years and increasing them at a rate of approximately 5% per year. During the same period, the share price has grown at an annualised rate of 7%.
Legal & General
Despite recent struggles, Legal & General (LSE: LGEN) remains a favourite among income investors. Its enduring dedication to shareholders is reflected in a yield that fluctuates between 8% and 10%.
Historically, this yield has been backed by strong earnings from its insurance, pension, and asset management businesses. However, recent struggles have hurt the company’s profits, with 2023 earnings missing expectations by 34%. Subsequently, its payout ratio is now unsustainable at 356%, raising the risk of a dividend cut.
Earlier this month, the company agreed to sell part of its US business and 20% of its UK business to Japanese firm Meiji Yasuda. The sale should bring in £2.3bn for L&G, helping it fund a planned £1bn share buyback programme.
The strategy should help turn its fortunes around, reaffirming its position as a top UK dividend stock.
