• ChatGPT top high-yield UK dividend stock picks—Phoenix Group, M&G, and British American Tobacco—offer strong income potential but come with notable risks.
• Use AI as a helpful starting point, but always do your own research before investing.

A Modern Tool with Classic Risks

AI tools like ChatGPT are making waves in investing circles. But can a chatbot really identify strong high-yield dividend stocks? The short answer: sometimes. While it can be a helpful starting point, investors must dig deeper. I put ChatGPT to the test by asking for the top three UK high-yield dividend stocks to buy today. Here’s what came up—and what to consider before diving in.

Phoenix Group: Big Yields, Modest Growth

First on the list was Phoenix Group (LSE: PHNX), a life insurance and pensions provider. ChatGPT touted a yield of 11.1%, though that figure is outdated. A more accurate forecast is 8.8%—still attractive.

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Phoenix has a solid track record of increasing dividends, but the pace is slow, lagging inflation. The firm operates in a highly competitive industry, which could pressure margins over time. Still, the company’s performance has recently exceeded expectations, justifying optimism—for now.

M&G: High Returns, High Uncertainty

Next came M&G (LSE: MNG) with a staggering 9.2% projected yield. The firm’s recent cost-cutting measures and a new strategic partnership with Japan’s Dai-Ichi Life have impressed the market.

But it’s not all smooth sailing. Since demerging from Prudential, M&G has shown inconsistent performance. The rise of passive investing and potential market downturns could dent future revenues and dividend sustainability. Again, a promising pick—if you’re aware of the risks.

British American Tobacco: Steady Income with a Clouded Future

Last up was British American Tobacco (LSE: BATS), offering a yield of 7.4%. This company has a long history of raising dividends and is pivoting toward reduced-risk products.

However, declining traditional tobacco sales and the ongoing threat of global regulation shouldn’t be ignored. While BATS may be the most stable of the trio, its future depends heavily on innovation and regulatory outcomes.

Use AI as a Tool, Not a Compass

ChatGPT’s picks aren’t wild guesses—they’re based on logical metrics like yield and dividend history. But it doesn’t replace thoughtful analysis. These stocks could offer solid income, but investors must consider broader trends and business fundamentals before committing.