Dividend Yield Forecasts: Legal & General, Aviva, and M&G Remain Top Contenders for UK Income Investor
FTSE 100 financial giants Legal & General, Aviva, and M&G are once again catching the attention of income-focused investors, thanks to their robust dividend yield forecasts for the next couple of years.
With current interest rates falling short of inflation, high-yielding shares like these remain a popular alternative. But what exactly are investors looking at for 2025 and 2026?
Legal & General is poised to offer income seekers something solid. Analysts are projecting dividends of 21.7p per share in 2025 and 22.2p in 2026. Based on the current share price of 256p, that translates to forecast yields of 8.5% and 8.7%.
Hard to ignore, right? That’s more than twice what most high street savings accounts are offering. But there’s a catch.
“Well, one is turbulence in the financial markets. This could affect the value of assets the insurer has on its balance sheet and lead to operating losses (and potentially share price losses).”
Another red flag? We’ve just seen RBC downgrade the stock to ‘Underperform’, citing concerns over a slowdown in pension risk transfer activity. Their price target’s also been trimmed to 220p.
Despite these headwinds, many still view Legal & General as a solid option for passive income. Just don’t overlook the volatility that might tag along.
Aviva’s not far behind. It’s expected to return 38.1p per share in 2025 and 40.8p in 2026. At a share price of 636p, we’re looking at dividend yields of 6% and 6.4%.
Not quite as high as Legal & General’s, but still well above the FTSE 100’s average yield, which currently hovers around 3.2%.
There are risks, though.
“In relation to pension risk transfer, the company actually advised recently that volumes this year are likely to be lower than in 2024.”
Another point worth noting: Aviva shares have had a stellar 2025 so far, with the stock jumping around 35% year-to-date. That’s a strong rally — but it also raises the chances of some short-term selling pressure as investors look to lock in profits.
Still, for long-term income seekers, Aviva remains a serious player.
M&G might be flying under the radar, but it’s delivering where it counts. Analysts are predicting dividends of 20.6p for 2025 and 21.1p for 2026. With shares currently at 259p, the expected yields are 8% and 8.2%.
“I see this stock as a bit of an undiscovered income gem. It’s not nearly as popular as stocks like Legal & General and Aviva, but its yield’s excellent.”
Not only that, M&G has raised its dividend every year since it separated from Prudential in 2019. That’s a reliable track record that income investors value highly.
Like its peers, it’s not without risk. Market volatility can shake things up here too. But for now, M&G offers an appealing mix of income and growth potential, with less of the spotlight.
With these dividend yield forecasts, Legal & General, Aviva, and M&G remain among the UK’s top income-generating stocks. They each have their pros and pitfalls, but collectively, they offer British investors a compelling reason to consider dividends as part of a diversified portfolio.
