Get an anti-inflation income of 13% a year tax free – the UK’s two best yielders SMASH cash | Personal finance | Finance

Most companies listed on the UK’s Blue Chip Equity Index reward investors with regular cash payments called dividends, which investors can withdraw from income tax using their £20,000 Isa allowance for stocks and shares.

Companies give investors a share of their profits, with dividends usually paid on a quarterly basis, plus the option of a “special” dividend on top if the company is having a particularly good year.

Unlike savings interest, dividends are not guaranteed, but can be cut, suspended or eliminated if company profits decline.

For example, during the Covid pandemic, almost half of FTSE 100 companies suspended their dividends, while others continued to pay them.

Most have now reinstated their payouts, and the average stock in the index is currently yielding 3.53%.

Some pay significantly more than that, including global mining giant Rio Tinto and homebuilder Persimmon, which at the time of writing yield 12.95% and 12.44% respectively. These are incredible income rates.

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