UPDATE: New reports confirm that UK shares are experiencing a remarkable surge in 2025, with the FTSE 100 climbing 19% and the FTSE 250 rising 7%. Amid this growth, HSBC and Aviva emerge as standout income stocks, offering exceptional dividend yields that investors should not overlook right now.
HSBC, trading at £11.18, has seen its share price soar by 43% this year. Despite the impressive gains, it maintains a robust dividend yield of 4.8%, surpassing the FTSE average of 3.1%. Analysts predict further growth, pushing the yield to 5.4% in 2026 and 5.7% in 2027. This stability is backed by HSBC’s Solvency II capital ratio of 14.5%, the strongest in the UK banking sector.
Notably, HSBC recently upgraded its full-year profit forecasts, hinting at a net interest income target of $43 billion. Analysts from Hargreaves Lansdown describe this target as “a little conservative,” indicating strong potential for robust earnings and dividend growth. The bank’s current forward price-to-earnings (P/E) ratio stands at 10.2, suggesting that the stock is still undervalued.
Meanwhile, Aviva has also enjoyed a significant rise in its stock value, climbing 38% to 655.4p. The insurance giant is projected to achieve £2.2 billion in operating profit for 2025, a full year ahead of its targets. Investors can tap into a dividend yield of 5.9% for this year, expected to increase to 6.3% in 2026 and 6.8% in 2027.
Despite Aviva’s current valuation at a prospective P/E of 12.5, its price-to-earnings growth (PEG) multiple of 0.5 indicates it is undervalued. The company’s solid financial foundation is reflected in its Solvency ratio, which remains strong at 177%.
As both companies navigate challenging economic conditions, their strong balance sheets and growth prospects make them attractive options for investors looking for reliable income sources. The market’s current state suggests that now is the time to act.
With 2025 shaping up to be another strong year for UK stocks, discerning investors should closely monitor these opportunities. What happens next? Investors should prepare to take advantage of these income stocks as the market continues to evolve.
Stay tuned for more updates on these promising investment opportunities!
