After spending hours sifting through the FTSE 100 to find Britain’s best dividend stocks, I decided to call in some artificial help.

I was curious to see what generative artificial intelligence chatbot ChatGPT would come up with, but was instinctively suspicious. Wouldn’t it just pick the five biggest yielders and be done with it?

I’m not privy to its algorithms but it’s clearly a bit more sophisticated than that. Although I wouldn’t describe any of its picks as a surprise. They’re all big blue-chips with mighty yields. So which passive income faves did my new ‘bot pal come up with?

Are these really the UK’s best income shares?

Well knock me down with an artificial feather but cigarette maker British American Tobacco was on the list. I’ve just finished writing an article highlighting its fabulous trailing yield of 7.95%.

This isn’t a one-off as ChatGPT pointed out: “The company has a history of consistent dividend payments, making it appealing to income-focused investors.”

British American Tobacco has survived the regulatory onslaught on cigarettes by building market share, sweating its brands and pursuing smokeless alternatives. Even its shares have picked up, climbing 25% in the last year. I can’t really argue with this.

It’s impossible to argue with my robot buddy’s next dividend pick either: HSBC Holdings (LSE: HSBA). I don’t hold the Asia-focused bank, but it’s at the top of my Buy list for when I have some cash.

ChatGPT says: “As one of the world’s largest banking institutions, it has a track record of regular dividend distributions.”

The current yield is 6.26% while the HSBC share price is up 22% over the last year. Yet it’s still cheap, trading at just 8.42 time earnings.

HSBC has challenges. Listed in London but generating the bulk of its profits in Asia, it’s tangled up in US-China trade wars. It’s hard to see how that will play out as President-elect Donald Trump talks of tariffs. New CEO Georges Elhedery is responding by splitting the group into Eastern and Western units.

I think it’s a brilliant income stock

HSBC has also been lavishing investors with share buybacks. They totalled £7bn in full-year 2023 financial year. Nice work, ChatGPT.

It also picked out mining giant Rio Tinto, which has a bumper trailing yield of 7.43%, although as my AI chum warned: “Dividend payments can be influenced by commodity price fluctuations.”

How true. I’ve suffered at the hands of Glencore lately, so won’t be buying Rio Tinto. It’s still a top dividend stock though and cheap at 8.03 times earnings.

I won’t buy its next suggestion either, energy giant Shell, but that’s purely because I hold rival BP. Shell’s yield is relatively modest at 4.6% but it’s also been engaging in share buybacks.

The one chatbot pick I do hold is Legal & General Group. It has a bumper yield of 9.29%. So it turns out that I’m the one chasing the big yielders, not AI. Perhaps my algorithms need a reset.

ChatGPT says Legal & General “is known for its consistent dividend payments”. I’d add it’s also known for its underperforming share price, but I’m hoping that will change.

Even though I can’t fault ChatGPT’s stock pick, I’ve still got doubts about its selection process. But I’d happily buy any five of these FTSE 100 dividend heroes today.

It’s been an interesting last 12 months for the FTSE 100. The UK large-cap index has climbed 7.3% to 8,254 as I write, but hasn’t made much headway since mid-2024.

There have been some big winners including Rolls-Royce and NatWest that have seen valuation gains of 92% and 85% in the last year, respectively.

However, I’m in bargain hunting mode at the moment. That means I want to find a hidden gem in the Footsie that could be a good fit for my existing portfolio.

There’s one unloved stock that has piqued my interest and I’m thinking about buying it in 2025.

Unloved REIT

British Land (LSE: BLND) is the stock in question. The real estate investment trust (REIT) has seen its share price sliding, down 8.6% in the last 12 months and 11.9% in the last three years, to £3.64 per share.

The company is one of the largest REITs in the UK, investing in a portfolio of London campuses and urban logistics assets, as well as retail parks across the country.

British Land’s strategic £1.1bn investment in retail parks in the last few years has helped boost earnings and profitability, partially offsetting challenges in the London office market.

The landlord booked a 1.7% decline in valuation for the half-year ended 30 November 2024, and analysts see its office exposure as a potential impediment to growing earnings per share (EPS) in 2025.

European Real Estate Association (EPRA) net tangible assets (NTA) is a common valuation metric in the REIT game. Notably, British Land’s EPRA NTA per share declined 4.4% to 562p on the back of its office sector exposure.

However, an increase in full-year EPS guidance to 28.1p, up from 27.9p, shows there are some green shoots emerging. Similarly, a 1% increase in the full-year dividend per share to 22.8p is good news for investors.

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To buy or not to buy?

There are several reasons why I’m considering buying British Land shares. For one thing, I think the office sector could perform better than expected this year.

It’s certainly an area of the property market that has been under pressure, but a falling interest rate environment and continued return-to-office trend could be supportive of a bottoming out on valuations.

I also like management’s clearly defined strategy. A recent £441m retail park portfolio acquisition from Brookfield is continuing to diversify the portfolio and reduce overall office exposure.

The key factor for me is how retail parks perform, including the recently acquired portfolio, which is fundamental to EPS growth forecasts for FY25 and beyond. Any further evidence of stabilising office valuations should also give investors comfort that the worst may be behind the REIT.

Verdict

I think British Land is an exciting prospect. There are still some big risks to buying the stock including commercial property market volatility, uncertain demand for office space and integration of its acquired retail parks.

However, I think where there’s risk there’s reward and a long-term outlook is important. The REIT would be complementary to my existing portfolio and is one that I’ll be looking at seriously when I get some spare funds.