Are these the best FTSE 100 dividend stocks to watch in February 2025?

The FTSE 100 may be continuing to underperform international indices, but the index nevertheless has risen by an impressive 11% year to date — and this excludes dividends. Having smashed through the symbolic 8,000— point barrier, the index currently rests on 8580 points.

FTSE 100 macroeconomics

After meeting the Bank of England’s (BOE) CPI inflation target rate of 2.0% on 2 August 2024, interest rates have gradually been reduced by 0.50 basis points and currently stand at 4.75%.

Recent figures released by the ONS showed inflation had dropped from 3.2% in October to 2.5% in January and the BOE is expected to reduce interest rates by 0.25 basis points to 4.50% at its next meeting on 6 February as a result.

Whilst the UK economy has now entered into a phase where interest rate cuts are likely, inflation remains above the BOE’s target of 2% and with high service inflation and price increases within the private sector inflation could creep up. If this happens, further rate cuts are likely to be more gradual.

Then there’s the AI-fuelled surge of the US tech stocks to consider. This may be a sustainable rise given the tech advances at hand or it may be a bubble that eventually bursts. If the latter, this excess capital may find itself within FTSE 100 dividend stocks until the storm blows over.

This all makes investing in FTSE 100 dividend stocks complex. In particular, the highest dividend yields can be hostage to economic policy — where individual investment cases and changing financial landscapes can create value traps or payout irregularities.

Open an account and start trading some of the top UK dividend stocks in 2025.

Best FTSE 100 dividend shares to watch

These shares are the highest yielding on the index with a dividend cover ratio of 1 or higher as of 19 November 2024. They may not be the best investments and the dividends and capital itself are not guaranteed.

M&G (dividend yield: 13%)

Savings and investment company M&G reported strong H1 results with assets under administration reaching £346 billion, up from £333 billion the year before. This was driven by positive market movements. Underlying operating profit was down 4% to £375 million, but still exceeded expectations.

Going forward, the company aim to grow its Asset Management and Wealth side of the business, so its profits account for 50% of the overall business, whilst beginning to phase out its annuity portfolio and legacy products.

In September last year the company announced an interim dividend of 6.60p which was paid out to shareholders in October. MGN has a cover ratio of 3.8, which indicates that if its strong performance continues, the company is well positioned to continue with dividend payments.

Our analysts have given the stock a buy rating with an average price target of 234p in the next 12—month period, up 14.48% from its current value.

Vodafone (Dividend yield: 8.32)

For the first half of the year, telecommunications company Vodafone reported robust results with revenue reaching €18.3 billion, up 1.8% year— on— year. This was mostly due to growth in Turkey, Africa and Other Europe, which helped offset weaker sales in Germany. Net debt decreased by 12% reaching €31.7 billion and EBITDA was up 3.7% to €5.4 billion.

On 7 February this year the company plans to distribute a dividend of 2.25¢ per share to shareholders. This dividend payment was reduced from 4.50¢ the prior year after the sale of its Italian and Spanish operations. Vodafone has a dividend cover ratio of 6.04, which indicates that the company has enough cash to continue paying dividends over the next year.

Our analysts have given the stock a hold rating with an average price target of 85p, up 26% from its current value.

British American Tobacco (Dividend yield: 7.86%)

British American Tobacco saw revenue drop 0.8% during H1 as cigarette volumes in the US, their main market, are down 9% and the company struggles to maintain their market share.

Despite this small single figure revenue drop, a successful H2 means that the company is on track to meet its full year guidance.

However, the FTSE 100 tobacco company will have to pivot fast, having written off £27.3 billion of its US brand portfolio after acknowledging they have ‘no long-term future.’ Compounding the weak combustibles growth, the UK recently announced a ban on disposable vapes which could hit BATS’ long-term ambitions in non-combustible categories — and is also imposing a specific vaping tax as well. This could hit margins if similar legislation is adopted more broadly.

BATS share price has performed well throughout 2024 and we may see further gains from here as their generous dividend of 58.88p per share remains a key attraction.

Our analysts have given the stock a buy rating, with an average price target of 3141p.

Land Securities Group (dividend yield: 7.17%)

Real estate company Land Securities Group delivered steady FY24 results which is largely due to the company’s decision to invest in its 12 top— quality assets to deliver strong income and growth, whilst selling £3.1 billion worth of its less valuable properties.

Despite broader market challenges, its properties are in high demand with office occupancy at just over 93% and retail at 95%. Because of this high occupancy, rental income increased by 3% and cost savings helped offset increased finance expenses.

Earnings remained stable year— on— year at £371 million and its total dividends increased by 2.6% to 39.6p. With a dividend cover ratio of 1.32, the company is likely to continue dividend payments throughout the next financial year.

Our analysts have given the stock a buy rating with a predicted price target of 690p, up 24% from its current value.

Rio Tinto (dividend yield: 6.83%)

Mining company Rio Tinto reported solid H1 results that were in line with market expectations. Underlying earnings reached $5.8 billion and operating cash flow reached $7.1 billion.

The company have recently agreed to buy Arcaduim Lithium for $5.85 per share. Whilst the lithium market is currently oversupplied, as the increased demand for Electric Vehicles increases, this is expected to change, and the substance is likely to be in high demand and in the long term could positively impact the company’s balance sheet.

In September last year the company distributed a dividend of 177.00¢ per share to shareholders, which remains stable payments the year before. With a dividend cover ratio of 2.39 it’s likely strong dividend payments will continue.

Our analysts have given the stock a buy rating with a predicted price target of 70436p in the next 12—month period, up 1337% from its current price.

How to invest or trade in FTSE 100 stocks with us

1. Learn more about FTSE 100 dividend stocks
2. Decide whether you want to trade or invest
3. Open an account 
4. Search for your chosen stock on our web platform or app
5. Make your investment or trade

When you invest in a share you buy it outright with the view that it’ll increase in value over time.

Trading takes a more short—term view where you look to take advantage of smaller market movements. It involves leverage which allows you to take a position that’s larger than your initial deposit. This means market movements are magnified, and you could gain or lose money faster than expected.

For example, if you trade with 5:1 leverage, you could place a £1000 deposit and manage a £5000 position. A 10% increase or decrease in the market could result in 50% profit or loss on your initial margin.

Negative balance protection will prevent you from losing more than your initial deposit, but market movements can be fast and unpredictable and you could lose your full deposit.