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It was wanting like FTSE 100 dividend payouts in 2025 had an opportunity of beating the all-time excessive of £85.2bn set in 2018. Or a minimum of coming very shut.
However the newest Dividend Dashboard from investing firm AJ Bell exhibits forecasts more and more falling behind. Analysts have reduce their earlier £83bn prediction to only £80.4bn. That’s solely round 2% above 2024’s complete.
And with the FTSE 100 up 11% thus far in 2025, the anticipated dividend yield for the index has declined to three.5%. However with share baybacks properly forward of final 12 months thus far, complete shareholder returns look set to hit round 5.25%.
That’s higher than the highest Money ISA returns, at a time when Financial institution of England charges are serving to prop them up. And we will additionally hope for long-term share worth features.
Favorite earnings choose?
This newest knowledge lends assist to a dividend inventory that’s been catching my eye of late and is value contemplating. It’s NatWest Group (LSE: NWG). And it’s beginning to appear like it could possibly be my subsequent potential financial institution purchase now that Lloyds Banking Group‘s undervaluation has been considerably outed.
NatWest boasts the most important predicted dividend rise this 12 months in money phrases, forecast handy over an additional £532m this 12 months. It seems like Lloyds is in for a rise of simply £129m. Their market-caps aren’t very totally different — with Lloyds at £47bn in comparison with NatWest’s £40bn — so the figures are largely comparable.
I’m beginning to like NatWest for different causes too, primarily its decrease valuation and powerful forecasts. Oh, and the absence of menace from the automotive mortgage mis-selling verdict due any day from the Supreme Courtroom.
Outperformance
NatWest shares have outperfomed Lloyds previously couple of years. However we’re nonetheless a decrease ahead price-to-earnings (P/E) ratio of beneath 9, in comparison with 11.7 at Lloyds.
The forecast dividend yield’s a bit higher too, at 4.3% in comparison with 4.1%. However the fall in these beforehand large financial institution yields exhibits valuations aren’t as screamingly low-cost as I believe they’ve been.
I believe the primary danger for NatWest shares is that we might see a sell-off if the financial system doesn’t enhance. The financial institution’s price-to-book ratio is a bit weak at simply over one.
Different prime FTSE 100 dividends
It means I see diversification amongst dividend shares as important proper now. And meaning my eye’s hovering over a number of different long-term favourites.
Authorized & Common is on a forecast 8.4% yield. Cowl by earnings seems a bit low at simply 1.0 occasions, however the AJ Bell report factors out that the dividend hasn’t been reduce previously decade.
I’m nonetheless drawn to Taylor Wimpey too, regardless of dividend cuts in 2019 and 2024 and modest cowl of 1.0 occasions once more. However I reckon housing demand means an affordable probability of the dividend doing high-quality in the long run — additionally set to yield 8.4% this 12 months.
Total, the 2025 pattern exhibits dividends slowing, with cowl by earnings getting a bit skinny. However shopping for FTSE 100 dividend shares stays my prime long-term technique.
