We take a look at three dividend shares with strong income characteristics and yields that beat the benchmark FTSE 100 dividend yield of around 3.2%.

Our dividend shares for consideration include a UK equity trust, an exciting small-cap, and a FTSE 100 stalwart.

Dunedin Income Growth Investment Trust

The Dunedin Income Growth Investment Trust (DIGIT) offers an attractive proposition for income-focused investors seeking sustainable, growing dividends from UK equities.

DIGIT offers an attractive 6.5% dividend yield, substantially ahead of both cash rates and the FTSE All-Share Index. The trust is also targeting a 34% dividend increase next year.

The Trust boasts a 43-year track record of maintaining or growing its dividend, demonstrating resilient income delivery through multiple market cycles and periods of volatility. This could be particularly valuable given that global equities are trading near highs.

The Trust’s differentiated positioning includes 49% invested in sub-£10 billion companies and 17% in European holdings, providing investors with exposure beyond the mega-cap dominated FTSE All-Share.

Investors choosing the trust will benefit from a “triple discount”. Quality stocks are undervalued relative to the market, the UK market trades at a substantial discount to global equities, and the trust’s shares trade at a discount to net asset value.

Adsure Services

Aquis-listed Adsure Services has consistently increased its dividend since listing in 2023, and it yields 7.6% at the current share price of 25p.

The dividend is backed by recurring revenues from long-term contracts with government-funded organisations. Supporting its ability to increase dividends in the years to come is its ‘Fit for the Future’ strategic initiative that aims to drive underlying efficiencies through the deployment of cutting-edge technologies.

In addition to the deployment of new software to enhance the work of its internal audit operatives, the company is readying the launch of its proprietary ‘TIAA Insight’ AI tool designed to improve key utilisation metrics.

This promises to drive further expansion of Adsure’s EBITDA margin, which rose to 11.8% from 9.4% in the year ended 31 March 2025. EBITDA jumped 35% during this period.

This is a company to tuck away and await further growth. 

BP

BP is an age-old income favourite. Yes, it’s involved in oil extraction that isn’t ESG-friendly, but BP’s scale and ongoing demand for fossil fuels will support earnings in the years to come.

It’s also an ‘ugly duckling’ of a stock that has detached from its intrinsic value and lags behind peers such as Shell in terms of valuation.

Recent results were unspectacular but reaffirmed its ability to generate cash as operating cash flow rose to $7.8bn in the third quarter. Lower oil prices presented a headwind during the period, and investors will be pleased to see OPEC+ taking measures to manage the supply glut, which has weighed on prices.

BP is streamlining its business through a series of divestments that will bolster the balance sheet and provide a strong base for future growth.

With a 5.2% dividend yield, BP offers both value and the potential for capital appreciation. The firm is also committed to share buybacks, announcing $750m in fresh purchases this week.

A worthy addition to any income portfolio.

Vistry said it is confident it can deliver profit growth in FY25 in a trading statement released on Thursday, pointing to strong demand from its partner model despite challenging market conditions.

The group said demand from Registered Providers and Local Authorities has continued to strengthen significantly, and the company expects to conclude several new Partner Funded deals in Q4.

It was surprising to see shares dip in early trade, but the weakness was bought into, and Vistry turned positive as the session progressed.

Vistry’s overall sales rate since July 1st has jumped 11% compared to the same period last year, reaching 0.81, up from 2024’s 0.73.

Perhaps investors were put off by the falling order book, which fell to £4.3 billion from £4.8 billion in 2024.

“Vistry’s showing signs of returning to life after a dismal period of operational slip-ups and profit guidance downgrades, as the group saw its sales rates climb 11% higher so far in the second half,” explained Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“Importantly, the UK government’s £39 billion pledge to increase the amount of affordable housing is having the desired effect. The money is starting to flow, and that’s seen partner-funded activity pick back up, with several new deals expected to be confirmed in the final quarter. As these houses are built, that will convert into revenue and should help the top line return to growth territory.”

“House prices are on the rise, demand is outstripping supply, and build-cost inflation remains at manageable low single-digit levels, with the latter being helped by Vistry’s huge scale, allowing it to negotiate harder on building materials.”

Vistry said build cost inflation remains controlled at low single digits, with material pricing having stabilised, while labor cost pressures are being managed through improved work visibility and continuity.

Filtronic plc has landed a €7 million contract to supply RF assemblies for a major Low Earth Orbit (LEO) satellite constellation programme.

The three-year deal with a leading European aerospace manufacturer marks another milestone for the UK-based RF solutions specialist after announcing a string of new wins this year, including several with Elon Musk’s SpaceX.

Filtronic will produce complex RF assemblies in-house, specifically designed for the harsh conditions of the space environment.

The LEO satellite constellation market is experiencing rapid growth as companies race to provide global broadband coverage. Multiple operators are launching thousands of satellites to create these constellations, creating substantial opportunities for specialised suppliers like Filtronic.

“This contract highlights our increasing diversification across customers within the space markets and reflects the trust placed in Filtronic’s capability to deliver at scale for the most demanding space applications,” said Nat Edington, Chief Executive Officer.

“As demand for satellite connectivity continues to grow, this is another milestone in Filtronic’s mission to support the growing satellite market for Non-Terrestrial Networks, Mobile Satellite Services, and Direct-to-Device connectivity.”

Marks & Spencer has confirmed the cyber attack led to £100m in costs, ravaging the group’s operating profit for the 26-week period ended 27th September.

Operating profit for the period fell to £184.1m from £413.1m in the same period last year despite sales rising 22% to £7.9bn.

The jump in revenue, however, was entirely due to the introduction of Ocado Retail revenue, accounting for around £1.5bn.

Stripping out Ocado Retail, M&S sales were flat. Ocado Retail, incidentally, is still loss-making.

Shares were little changed on Wednesday, with much of the bad news priced in. M&S had previously warned that the cyber attack could cost £300m.

“It had all been going so well at Marks & Spencer,” said Mark Crouch, market analyst for eToro.

“But as chief executive Stuart Machin put it, the first half of this year was “an extraordinary moment in time for M&S”, and that’s putting it mildly. The retailer’s underlying profit slumped 55%, laid low by the fallout from April’s cyberattack that crippled its website and halted online clothing orders for seven weeks. Click-and-collect services were down for nearly four, and food operations weren’t spared either.

“The damage shows most starkly in fashion and home, where profits collapsed by more than 80% to £46.1 million, and sales tumbled 16.4% to just under £1.7 billion.”

“It’s a bitter blow for a brand that had been flying high, finally shaking off its dowdy image and delivering the kind of retail renaissance investors had only dreamed of. That the share price has held up so resiliently is testament to the strength of the turnaround before the hack, but 2025 now looks like a year of what-ifs.”

The struggles of the hospitality industry are well-documented. Wetherspoons, however, is outperforming the wider industry and making the best of a bad situation.

In the first 14 weeks of the financial year, like-for-like sales rose 3.7% year-on-year. Bar sales climbed 5.7%, whilst food grew a modest 0.9% and slot machines jumped 8.9%. Hotel room sales fell 6.3%.

Total sales increased 4.2% year-to-date.

“J D Wetherspoon’s sales growth has slowed in the first fourteen weeks of the financial year to 3.7%. At the last check, that number stood at 3.2% for the first nine weeks, so investors should take some comfort in the pub chains continued resilience,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

The CGA RSM Hospitality Business Tracker, which monitors monthly like-for-like sales across multi-site pub and restaurant operators, reported industry sales of 0.2% in September. Investors will take some solace in the fact that Wetherspoon posted 3.4% growth for the same period.

The pub chain has now outperformed the industry tracker for 37 consecutive months.

But, arguably, the most interesting part of today’s trading update was the criticism of the UK government by the Wetherspoons Chairman:

“In our recent annual report, it was stated that a “main lesson of the 1970s (is that) if energy prices go up… inflation results and almost everyone is poorer,” said Wetherspoon chairman Tim Martin.

“The point was also made that the proposed development of “standby” nuclear power, for periods when wind and solar energy were unavailable, would require the UK to approximately match France’s 59 nuclear reactors.

“However, the UK has only nine nuclear reactors today, most of which are due to be decommissioned by 2030.

“So far, the logic of the points made in the annual report has not been questioned and more detailed arguments, emphasising the need for wider public debate, are advanced in the most recent edition of Wetherspoon News.

“A second point made in the annual report is the startling fact that none of the chairmen of the mega-successful US technology companies (Microsoft, Apple, Meta, Amazon, Nvidia etc) comply with UK corporate governance guidelines, which include, for example, a ludicrous “nine-year rule”.

“As a matter of common sense, few sensible technology entrepreneurs would envisage a London flotation for this reason alone.

“Perhaps the UK powers-that-be don’t feel we need to try and attract these sorts of companies. However Nvidia, alone, is apparently worth nearly one and a half times the capitalisation of the entire London stock market.

“I have written about the absurdities of corporate governance for many years- for example in this article from 2014. Strangely, almost no one has ever contradicted the points made- yet nothing much has changed either.

“A final and related point concerns wages and taxation. The average price of a pint in pub is about £5.16 and labour is about 35% of the ex-VAT sales price (Mitchells & Butlers 36.2%, FY24), about £1.50 per pint.

“A supermarket pint costs about £1.50 and labour is about 12% of the ex-VAT sales price (Tesco 12.0%, FY24), about £0.15 per pint.

“Therefore, it can be seen that a 10 per cent wage rise will increase the cost of a pint by about 15 pence in a pub versus about 1.5 pence in a supermarket.

“Increased labour costs are, consequently, dramatically widening the pricing differential between pubs and supermarkets, to the anger and consternation of customers. 

“A further widening of the differential results from pubs paying 20% VAT on food sales, whereas supermarkets pay nothing.

“As investment bank Morgan Stanley pointed out in recent research, pubs have lost 50% of their beer volumes to supermarkets since the year 2000- price is surely the main culprit.

“It is important to emphasise the above points since it’s not clear that they are fully appreciated by legislators, economists or the public.

“The company is pleased with the continued sales momentum but is mindful of the Chancellor’s Budget statement later this month and, as a result, is slightly more cautious in its outlook for the remainder of the year.”