Picture supply: Getty Pictures
The FTSE 100 incorporates some staggeringly beneficiant dividend shares at the moment. Three presently yield greater than 8%, with one a whisker away from 9%. A couple of extra pay greater than 7%, whereas a number of others ship earnings of over 6% a 12 months. Any share worth progress traders get shall be on prime of that.
Aha, sceptics will say, however a sky-high yield usually alerts hassle. That’s true. Vodafone‘s a traditional instance. At instances the telecoms large yielded greater than 10%, however that didn’t final. In 2019, payouts have been slashed by 40%, and this 12 months they have been halved once more. Right now, the yield’s a extra modest 4.3%, although at the very least the shares are lastly rising.
Nonetheless, excessive yields will also be real alternatives. As ever, all of it will depend on the inventory in query.
Financials doing the heavy lifting
I maintain three of the FTSE 100’s prime 4 yielders in my Self-Invested Private Pension (SIPP): Authorized & Normal Group, Phoenix Group Holdings and M&G (LSE: MNG). All yield greater than 7.7%, with Authorized & Normal providing an enormous 8.8%.
I additionally personal housebuilder Taylor Wimpey, which yields 8.6% and was within the FTSE 100 till just lately. Right now, it resides within the FTSE 250. These are unbelievable charges of earnings, miles above at the moment’s FTSE 100 common yield of three.15%.
They’re a bit too concentrated in monetary providers, however I find it irresistible when these large fats dividends hit my SIPP. I’ve studied the corporate accounts and the boards look decided to keep up payouts. There aren’t any ensures. Taylor Wimpey trimmed its dividend by 1.25% in 2024, whereas the remainder plan modest will increase of round 2% going ahead.
Not each tremendous yielder tempts. WPP has a headline 10.8% yield, however don’t be fooled. The FTSE 100 media and promoting large’s shares are in freefall, and the dividend shall be reduce by 50% in November.
M&G’s my favorite
Of the bunch, M&G’s my choose. It’s given me share worth progress in addition to earnings. The inventory’s up 27% within the final 12 months and 50% over 5 years. With reinvested dividends, traders would have greater than doubled their cash.
Over the previous 5 years, its dividend progress averages a modest 2.4% a 12 months, however the excessive yield makes up for it. The group’s Solvency II protection ratio stood at 230% within the first half of 2025, even after funding the Could payout. Whereas working capital era dipped to £408m from £486m year-on-year, it grew on an underlying foundation. The dividend seems to be stable, however no ensures.
M&G’s ahead price-to-earnings ratio of 10.5 suggests it’s pretty priced, and analysts count on the yield to carry above 8% in 2026. There are dangers. A inventory market crash might hammer property underneath administration and fund inflows, whereas as an energetic supervisor M&G faces a relentless menace from the recognition of low-cost, passive ETFs.
Nevertheless, I’d nonetheless say it’s effectively value income-focused traders contemplating at the moment. I’d say the identical for Phoenix and Taylor Wimpey – I believe the housebuilder is a superb potential restoration play, for when rates of interest fall and the financial system and housing market choose up. Authorized & Normal’s underwhelming, however I’ll give it time.
The place else can I get this stage of passive earnings? That’s the great thing about FTSE 100 dividend shares, and why I believe they’re a golden alternative at the moment.
