Even with the UK stock market reaching record highs, there are still some attractive dividend shares offering generous payouts in 2026. Two that have recently caught the eye of institutional analysts are Dunelm Group (LSE:DNLM) and Telecom Plus (LSE:TEP), both offering yields of 5.1% and 5.9% respectively.

So should I listen to the experts and consider buying these FTSE income stocks today? Or have the pros overlooked some glaring issues?

Why Dunelm keeps winning analysts over

As a quick reminder, Dunelm’s the UK’s leading homewares retailer, selling everything from bedding and curtains to furniture and kitchenware through its network of stores and a fast-growing online business. And the firm’s July trading update showed exactly why analysts remain upbeat, with full-year sales climbing 3.1% to £1,825m and gross margin expanding to 52.5%.

Digital sales now make up 42% of the total, and management continues opening new superstores at pace, including a fresh site in Kingston-upon-Thames.

As a result, both Jefferies and Berenberg have reiterated their Buy recommendations. And when looking across the entire spectrum of analysts, the consensus 12-month share price target now stands at 1,080p (roughly 22.2% higher from today), along with a dividend per share expected to grow from 45p to 57.5p by the end of 2026.

That’s obviously an encouraging signal for both growth and income investors. However, not everyone is convinced. For example, the team of experts at Deutsche Bank have a cautious outlook with a Hold recommendation, pointing specifically to softening UK consumer confidence and slower retail spending.

Telecom Plus, which trades as Utility Warehouse, bundles energy, broadband, mobile, and insurance into a single household bill. That multiservice model helped drive customer numbers up 23.3% to 1.43 million in its 2026 fiscal year (ending in March), with revenue climbing by 5.6% to £1,941.1m.

Alongside the results, management unveiled an ambitious new five-year plan targeting over one million multiservice customers by 2031. As such, Berenberg once again maintained a Buy recommendation. But the price target was subsequently cut drastically from 2,600p to 1,200p.

That still implies a potential 41.5% capital gain from where the stock is trading today. But it nonetheless begs the question: why was the price target slashed by more than half?

The answer lies in management’s growth strategy. Reaching one million multiservice customers is expected to drive up considerable investment spending by the business in the near term, putting pressure on profit margins.

Seeing management deliberately sacrifice short-term profit for long-term gains does signal prudent forward-thinking leadership. But it nonetheless means that underlying pre-tax profits are actually anticipated to dip between £80m and £90m for its 2027 fiscal year, down from £132.2m. And with it, dividends are likely to follow.

The bottom line

Out of the two dividend shares picked by analysts, Dunelm Group looks like the safer bet for income investors right now. Telecom Plus is undoubtedly executing an exciting long-term growth strategy. But with shareholder payouts likely to get chopped in order to execute this strategy, investors wanting stable, reliable passive income might be left disappointed.

However, there’s another FTSE dividend stock that’s caught my attention this week that the experts seem to have missed, and it currently offers an even juicier dividend yield…

What income stock do we like better than Dunelm Group Plc right now?

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Zaven Boyrazian does not hold any positions in the companies mentioned.