Rolls-Royce (LSE: RR.) shares have taken off in the past three years and could soon become even more valuable. With earnings through the roof, the aerospace and defence giant’s enthusiastically refocusing on dividends.

In 2024, dividends were introduced at 6p per share and in 2025, this was boosted to 9.5p. The full dividend is now forecast to reach 14.3p by 2027 and 17.3p by 2028. It’s realistic to assume that by 2029, they’ll be paying out over 20p per share.

But if today’s price of £12.28 holds, that only equates to a meagre yield of around 1.7%. Sure, it’s a step up from 0% but still, not much.

Of course, if the share price dips, the yield will ramp up. But that’s hardly encouraging if you’re looking to invest today. So what does the dividend story look like going forward?

Valuation matters

If you bought 333 shares today, it could bring in around £220 in dividends over the coming three years. From an investment that currently costs around £4,089, that’s not much.

In five-10 years, Rolls may once again be a top dividend-payer on the FTSE 100. But at the current valuation, it doesn’t make much sense for income investors.

Don’t get me wrong – the company’s doing a great job of rewarding shareholders. But after a 1,000%+ price rally, the yield simply can’t compete with the growth.

So what looks better right now?

When thinking in terms of income, it pays to lock in a dividend share when the price is low and yield high. That way, if the price rises and yield dips, your shares still pay out at the yield you bought. Plus, any capital gains add value to your investment.

Currently, Hikma Pharmaceuticals (LSE: HIK) appears to fit that narrative. In 2025, it paid a full year dividend of 84p per share, which is expected to reach over 100p by 2029.

At £14 a pop, 333 shares would cost around £4,662 – not cheap! However, over a three-year period, they’d pay out £617.88 in dividends. That’s still not life-changing money, but the key here is valuation. The price is estimated to be only 8.6 times forward earnings, while Rolls’ is closer to 32 times!

In my opinion, that growth potential combined with the higher yield could deliver far greater returns than Rolls. After all, the average 12-month price target from 11 analysts monitoring Hikma is £18.77. That’s a potential 33.9% increase from today.

So what’s the catch?

Rolls and Hikma are very different companies, so a purely income-based comparison doesn’t tell the full story. While Rolls still benefits from recovery momentum and steady government contracts, Hikma faces more immediate challenges.

In February, it downgraded its 2026 guidance as stiff competition hurt its injectables business and US tariffs ramped up costs. But it still has a solid pipeline of products in play, so I think it’ll recover quickly from this short-term dent. As always, nothing’s guaranteed.

On balance, Hikma’s the more appealing stock to consider for investors targeting income over the coming three years. For Rolls, I’d take a breather and see where the price goes before revisiting the stock.