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Essentially the most laid-back investor gained’t have failed to note that the FTSE 100 is doing very nicely in 2025. Even sure dividend shares — these primarily purchased for the passive revenue they throw off — have made nice good points.
At this time, I’m two examples, each of whose share costs now sit at (or very close to) 52-week highs.
Smokin’ scorching
Anybody shopping for British American Tobacco (LSE: BATS) inventory at the start of 2025 is entitled to really feel relatively smug. The share value has now climbed 43% this yr — roughly 4 instances the return of the index. Issue within the 60p a share dividends obtained in Could and August and the result’s even higher.
This momentum has been justified by the corporate’s newest set of outcomes.
Along with beating analysts expectations on revenue within the first-half of the yr, the corporate mentioned that enterprise within the US had grown for the primary time in three years. That’s vital contemplating this firm makes almost 50% of gross sales throughout the pond.
Extra to return?
After all, there’s no means of understanding the place share costs are going subsequent. That is why we desire to deal with the long run right here on the Motley Idiot UK.
Even so, we all know that the corporate now expects annual income progress will are available on the prime finish of its forecast vary. Whereas CEO Tadeu Marroco thinks any tariff-related prices could be absorbed by margins, any backtracking by Donald Trump might additionally present a lift.
Alternatively, it’s solely a matter of time earlier than new rules on the sale of nicotine pouches are launched. This might lead some to take revenue and transfer on, particularly as gross sales of conventional tobacco proceed to say no.
Whether or not these investing for revenue will likely be among the many sellers is open to debate, although. A chunky 5.8% dividend yield, sufficiently lined by revenue (as issues stand) might be deemed enough compensation.
Boring however beautful
Additionally driving excessive is financial savings and funding firm M&G (LSE: MNG).
Like British American Tobacco, this isn’t the kind of inventory to get the heartbeat racing. Nonetheless, the share value is up 34% in 2025 alone — extra proof that one doesn’t have to personal glitzy tech-stocks to make a killing.
M&G’s purple patch could be attributed to numerous developments. In Could, a strategic partnership with Japanese insurer Dai-ichi Life was introduced with the latter taking a 15% stake. Elsewhere, the market has been cheering cost-cutting measures, pushing working revenue larger.
Large dividend yield
However, in fact, many/most traders proceed to be attracted by the potential revenue stream. Regardless of the bounce in value (which pushes the yield down), M&G inventory yields a monster 7.8%. On condition that the common throughout the index is round 3.3%, this unsurprisingly makes the corporate one of many greatest payers in the whole FTSE 100.
On prime of this, the shares nonetheless look low cost relative to remainder of the UK market with a price-to-earnings (P/E) ratio of 10.
No funding is totally secure, nonetheless. For M&G, the aforementioned alliance with Dai-ichi Life — whereas providing alternatives to develop — has execution threat.
Personally, I’d be stunned if the present momentum lasted for the remainder of the yr. However, once more, many will doubtless take into account staying invested for the dividends.
