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Wealth supervisor M&G (LSE: MNG) and insurance coverage conglomerate Phoenix Group Holdings (LSE: PHNX) are my two fave FTSE 100 dividend earnings shares. After immediately’s inventory market downturn, I like them much more.
A fast look at both firm will reveal why I’m a fan: each supply mind-boggling ranges of earnings.
M&G yields 10.22% a 12 months and Phoenix gives an much more beneficiant passive earnings of 10.31%. On the FTSE 100, solely Vodafone Group gives a better yield, however that’s not going to final. The telecoms large will halve shareholder payouts in March 2025.
Why I like M&G
Yields are calculated by dividing the dividend per share by the share value. So when shares fall, as they’re doing proper now, the yield rises. It’s easy maths.
This additionally factors to an issue. M&G and Phoenix pay a lot earnings as a result of their shares have carried out so poorly.
Over one 12 months, the M&G share value is up simply 3.58%. That trails the FTSE 100 as a complete, which rose 5.12%. Phoenix did worse, falling 0.75%. This isn’t a one-off dip. Over three years, they’re down 13.25% and 22.73%, respectively.
UK monetary shares have been out of favour for a while now. That’s partly because of excessive rates of interest. Buyers can get 5% a 12 months from money or bonds, with no threat. Whereas M&G and Phoenix supply way more earnings, capital is in danger as with every inventory.
That doesn’t fear me personally. I purchase shares like these with a long-term view. I anticipate each firms to thrive over time, giving me way more earnings and progress than any financial savings account or authorities bond. Albeit with much more volatility alongside the way in which.
The primary main query is whether or not their dividends can survive. As soon as a yield tops 10%, it’s within the hazard zone. Simply ask Vodafone buyers. Nonetheless, I’m betting that these two will.
Phoenix Group may additionally fly
The M&G board has clearly acknowledged its coverage of “delivering secure or rising dividends to our shareholders”. I believe the dividend is prone to stay secure, however progress could also be in brief provide. The board elevated the dividend per share by simply 0.1p to 19.7p in 2023. Markets didn’t like that and the share value has taken the brunt of their displeasure. Given the huge yield, I’m in a extra forgiving temper.
Phoenix has a strong dividend monitor of late, growing shareholder payouts in seven of the final 9 years. Within the different two years, it froze them. A type of years was the pandemic, in order that’s fairly forgiveable. Let’s see what the chart says.
Chart by TradingView
Dividend progress might gradual however I gained’t be crying in my pillow if it does. What I don’t wish to see is a dividend reduce. That may in all probability torpedo their share costs, too. I don’t suppose we’ll get one however who is aware of?
It brightens my day up each time their dividends hit my self-invested private pension (SIPP). If I can discover any money, I’ll benefit from the market tantrum and purchase extra of each.
