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The FTSE 100 incorporates some staggeringly beneficiant dividend shares right now. Three at present yield greater than 8%, with one a whisker away from 9%. A number of extra pay greater than 7%, whereas a number of others ship revenue of over 6% a 12 months. Any share worth development buyers get will likely be on prime of that.
Aha, sceptics will say, however a sky-high yield usually alerts bother. That’s true. Vodafone‘s a classic example. At times the telecoms giant yielded more than 10%, but that didn’t final. In 2019, payouts had been slashed by 40%, and this 12 months they had been halved once more. At present, the yield’s a extra modest 4.3%, although at the very least the shares are lastly rising.
Nonetheless, excessive yields can be real alternatives. As ever, all of it relies 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 & 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 not too long ago. At present, it resides within the FTSE 250. These are unbelievable charges of revenue, miles above right now’s FTSE 100 common yield of three.15%.
They’re a bit too concentrated in monetary providers, however I like it when these massive fats dividends hit my SIPP. I’ve studied the corporate accounts and the boards look decided to take care of 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 big’s shares are in freefall, and the dividend will likely be minimize by 50% in November.
M&G’s my favorite
Of the bunch, M&G’s my choose. It’s given me share worth development in addition to revenue. 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 strong, 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 beneath 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 nicely price income-focused buyers contemplating right now. I’d say the identical for Phoenix and Taylor Wimpey – I believe the housebuilder is an excellent 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 stage of passive revenue? That’s the great thing about FTSE 100 dividend shares, and why I believe they’re a golden alternative right now.
