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Footsie dividend shares are set for bumper money payouts in 2025. And the index may be on for a brand new annual file for share buybacks.
That’s what the most recent outlook from AJ Bell‘s Dividend Dashboard says. Aggregated from stock market analysts, forecasts indicate £79.4bn in FTSE 100 dividends this year. And with the index also up 17% so far in 2025, I think it’s truthful to name it an incredible 12 months for UK buyers.
Share buybacks assist enhance costs, as they carry future per-share measures like earnings and dividends. And with £50.9bn introduced by the top of September, the all-time file of £58.5bn — set final 12 months — is in sight.
Add the anticipated dividends and buybacks, and we’re round £130bn in whole FTSE 100 shareholder returns in 2025. That’s 5.5% of the whole worth of the index. Who needs all their cash in a Money ISA when one thing like that is on provide? Not me, that’s for certain.
Match the index
The 2025 outlook suggests a simple method to long-term investing. That’s to contemplate an index tracker. We might purchase shares in, say, iShares Core FTSE 100 UCITS ETF — which is easier than its huge identify would possibly sound. It simply tracks the index with the intention of matching its development and dividend returns.
It’s nonetheless open to normal inventory market threat, and dangerous years could be simply as dangerous as the entire market. I additionally suppose buyers ought to contemplate different comparable exchange-traded funds managed by completely different firms — simply to diversify in that path too.
However as a strategy to make investments some cash within the inventory market after which sit again for the long run — with no head-scratching or poring over monetary studies — it could possibly be exhausting to beat.
Beat the index?
Many buyers have extra time to spare, and we wish to attempt to do even higher than the cracking index efficiency I described above. In my case, I give attention to sectors I believe can generate sturdy long-term money stream. I price insurance coverage as a key favorite.
I maintain Aviva shares, however I’m additionally contemplating including Authorized & Basic (LSE: LGEN) to my Shares and Shares ISA. The share worth has been comparatively flat for the previous few years. However we’re a hefty 9% forecast dividend yield.
Dividends aren’t assured. And the insurance coverage enterprise will be one of many Footsie’s extra unstable sectors. However AJ Bell factors out that we haven’t seen a dividend minimize from L&G up to now decade.
Cowl and forecasts
I’m a bit involved that forecast earnings for this 12 months fall in need of the expected dividend. However with earnings anticipated to develop strongly within the subsequent few years, my concern’s muted.
At interim time, CEO António Simões mentioned: “We’re delivering on our promise to return extra to shareholders with over £5bn in dividends and share buybacks over three years.“
Volatility — of earnings and share worth — nonetheless must be the primary threat. However I believe buyers eager to maximise their share of FTSE 100 dividends ought to positively take into consideration Authorized & Basic.
