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The FTSE 100 accommodates some staggeringly beneficiant dividend shares right now. Three at the moment yield greater than 8%, with one a whisker away from 9%. Just a few extra pay greater than 7%, whereas a number of others ship earnings of over 6% a 12 months. Any share value development buyers get might be on high of that.
Aha, sceptics will say, however a sky-high yield usually indicators hassle. That’s true. Vodafone‘s a basic instance. At instances the telecoms big yielded greater than 10%, however that didn’t final. In 2019, payouts had been slashed by 40%, and this 12 months they had been halved once more. At this time, the yield’s a extra modest 4.3%, although at the very least the shares are lastly rising.
Nonetheless, excessive yields may also be real alternatives. As ever, all of it is dependent upon the inventory in query.
Financials doing the heavy lifting
I maintain three of the FTSE 100’s high 4 yielders in my Self-Invested Private Pension (SIPP): Authorized & Common Group, Phoenix Group Holdings and M&G (LSE: MNG). All yield greater than 7.7%, with Authorized & Common providing an enormous 8.8%.
I additionally personal housebuilder Taylor Wimpey, which yields 8.6% and was within the FTSE 100 till lately. At this time, it resides within the FTSE 250. These are unbelievable charges of earnings, miles above right now’s FTSE 100 common yield of three.15%.
They’re a bit too concentrated in monetary providers, however I adore it when these massive fats dividends hit my SIPP. I’ve studied the corporate accounts and the boards look decided to keep up payouts. There are not 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 big’s shares are in freefall, and the dividend might be reduce by 50% in November.
M&G’s my favorite
Of the bunch, M&G’s my choose. It’s given me share value development in addition to earnings. The inventory’s up 27% within the final 12 months and 50% over 5 years. With reinvested dividends, buyers would have greater than doubled their cash.
Over the previous 5 years, its dividend development 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 appears to be like stable, however no ensures.
M&G’s ahead price-to-earnings ratio of 10.5 suggests it’s pretty priced, and analysts anticipate the yield to carry above 8% in 2026. There are dangers. A inventory market crash might hammer belongings below administration and fund inflows, whereas as an energetic supervisor M&G faces a relentless risk from the recognition of low-cost, passive ETFs.
Nonetheless, I’d nonetheless say it’s effectively price income-focused buyers contemplating right now. I’d say the identical for Phoenix and Taylor Wimpey – I feel the housebuilder is a superb potential restoration play, for when rates of interest fall and the financial system and housing market choose up. Authorized & Common’s underwhelming, however I’ll give it time.
The place else can I get this degree of passive earnings? That’s the great thing about FTSE 100 dividend shares, and why I feel they’re a golden alternative right now.
