The UK stock market has done fairly well so far in 2026, with the FTSE 100 index of leading shares hitting an all-time high earlier in the year.
Share prices moving up can often mean falling dividend yields, as yield is a function of share price and the annual dividend per share. Still, I have been hunting for income shares to add to my Stocks and Shares ISA and I still see plenty of opportunities in the market.
Here are five UK income shares I think merit consideration this June for a Stocks and Shares ISA.
M&G
FTSE 100 asset manager M&G (LSE: MNG) aims to grow its dividend per share annually and has managed to do so in recent years. Even after a 30% rally in its share price over the past year, M&G still offers a yield of 6.2%. That is double the FTSE 100 average and puts the firm among the top ranks of high-yield shares in the index.
Can that last? No dividend is ever guaranteed, after all. M&G’s strengths include a proven cash generation potential thanks to a business that has millions of clients. Its strong brand helps and a multinational focus gives M&G some protection against underperformance in any one market.
But it has struggled in recent years to get investors to put more into its funds than they take out, a risk to revenues and profit. It is on the front foot in that regard right now, but I still see it as a risk, especially in current volatile financial markets.
British American Tobacco
British American Tobacco shares are not the bargain they once were, with a price gain of 65% over the past five years. But the dividend yield remains attractive at 5.3%. So too does the company’s aim to continue its decades-long streak of annual growth in the dividend per share.
A declining number of cigarette smokers poses a clear risk to the dividend’s ultimate survival. British American Tobacco’s revenues are already declining. But it has a premium brand portfolio and proven cash generation potential.
Henderson Far East Income
There is life beyond the FTSE 100! I hold some FTSE 250 shares in my Stocks and Shares ISA.
The 9.4% yield offered by FTSE 250 investment trust Henderson Far East Income certainly grabs my attention. The portfolio’s exposure to big Asian growth stories is a positive, though a risk I see is current lacklustre performance of some sizeable Asian economies.
Domino’s Pizza
I have hung onto my shares in Domino’s Pizza, even though investor enthusiasm for the UK master franchisee has waned. The share price has fallen 52% in five years. Ouch!
The increased popularity of chicken is a risk to pizza sales. The chain has tried to mitigate that with its own chicken offer. I like the business’s profitable business model, strong brand and attractive economics.
Dunelm
With its cash generative business model and a 5.7% dividend yield, I believe the long-term income prospects from Dunelm are promising. It has a large estate of stores, sizeable online business, good understanding of what its customers want and an array of unique products that can help set it apart from rivals.
One risk I see is weak consumer sentiment. That could lead people to cut back on home decoration, potentially eating into revenues.
Should you invest £5,000 in M&g Plc right now?
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Christopher Ruane owns shares in Domino’s Pizza Group plc.
