The UK stock market has surged again in 2026, pulling the yields on dividend shares lower. The FTSE 100 — that popular hunting ground for passive income investors — has risen 10% since 1 January. As a consequence, the index’s overall dividend yield has tumbled to 2.9%, below the long-term average of 3% to 4%.
The result? It means you and I need to do some extra legwork to find quality, big-paying dividend stocks. The good news is I’ve just done some share hunting for my own portfolio. And I’ve found two top stocks that not only offer sky-high yields; they also provide terrific value in other ways.
But what are these dividend dynamos?
22% share price rise
M&G (LSE:MNG) has risen a spectacular 22% since the start of the year. That’s more than double the rise of the broader FTSE 100.
But here’s the thing: following years of share price underperformance, the financial services giant still offers tremendous value at 350.1p. The yield has dropped but remains at 6% for 2026, twice that of the Footsie forward average. And it moves to 6.2% for next year.
On top of this, M&G’s price-to-earnings-to-growth (PEG) ratio for 2026 is 0.1. And for next year it sits at 0.7, also inside the bargain watermark of 1.
Why is M&G a dividend star?
M&G is one of the FTSE 100’s true dividend heroes. It’s well capitalised, with a Solvency II capital ratio that’s twice as large as what regulators require (230% as of June).
The company’s operations require limited capital. At the same time, it enjoys substantial fee income from managing assets for retail and institutional clients. It’s the perfect blend for large and growing dividends, which have risen every year since M&G shares listed in 2019.
Just be mindful that its operations are still sensitive to economic conditions. I don’t expect any downturn to impact near-term dividends. But this could be an issue for M&G’s share price.
Check out that 7.2% yield!
Investec (LSE:INVP) shares have matched the FTSE 100 since 1 January, rising 10% in value. But the bank still packs tremendous value based on predicted dividends and earnings.
Firstly, its price-to-earnings (P/E) ratio is just 8.1 times for this financial year (to March 2027). For fiscal 2028, it drops to 7.3 times.
As for dividends, I can lock in a 6.6% dividend yield at today’s price of 639.5p. That’s for 2026 — for 2027, the figure jumps more than half a percent, to 7.2%.
Why makes Investec a class dividend share?
Investec has raised dividends in 12 of the last 13 years. Like many FTSE 100 dividend shares, it cut payouts when Covid-19 struck in 2019.
The secret to its long-term dividend record? Like M&G, the firm enjoys strong recurring fees and a capital-light business model, underpinning its balance sheet. As of March, its Common Equity Tier 1 (CET1) ratio was an excellent 13%.
Investec’s exposure to South Africa may put off more risk-averse investors. If this is you, don’t worry. There are plenty of other top dividend shares to consider today…
What income stock do we like better than Investec Group right now?
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Royston Wild does not hold any positions in the companies mentioned.
