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Having been an investor for almost 4 many years, my investing technique has developed over time. These days, I’m an enormous fan of two issues. First, worth investing, which my hero Warren Buffett defines as shopping for into nice firms at truthful costs. Second, I like amassing passive earnings within the type of share dividends.
Fabulous FTSE 100 dividends
As a worth/dividend investor, I’ve discovered a lot of my prime shares within the UK’s essential FTSE 100 index. Certainly, my household portfolio at the moment contains over 20 completely different Footsie and FTSE 250 shares. We purchased many of those for his or her market-beating dividend yields.
In fact, the FTSE 100 is a broad church, particularly by way of measurement. For instance, it contains big firms valued at a lot as £197.3bn in addition to a lot smaller companies of round £3.5bn. Additionally, not all Footsie shares pay dividends, whereas the very best money yields can exceed 9% a yr.
Curiously, the overwhelming majority of the FTSE 100’s passive earnings/share dividends comes from only a handful of firms. Actually, greater than half — roughly 53% — of complete FTSE 100 dividends for 2025 ought to come from simply 10 shares.
Three dividend dynamos
For instance, take these three mega-cap UK shares, which collectively pays virtually 1 / 4 (23.4%) of all anticipated FTSE 100 dividends this yr:
FirmTradeShare valueMarket worthDividend yieldYearly payoutHSBC HoldingsBanking994.8p£172.0bn5.0%£8.6bnShellEnergy2,690p£156.3bn4.0%£6.3bnUnileverConsumer goods4,551p£111.3bn3.4%£3.7bn
The overall anticipated dividends in 2025 from these three world Goliaths involves £18.6bn. That’s roughly £650 for every of the UK’s 28.6m households. Nonetheless, this useful passive earnings is just for the shareholders of those companies. Additionally, future dividends aren’t assured, to allow them to be reduce or cancelled at brief discover.
Common Unilever
My household portfolio contains one among these dividend dukes: Unilever (LSE: ULVR). We purchased into this Anglo-Dutch producer of fast-moving shopper items for its robust portfolio of manufacturers and its respectable dividend yield.
I see Unilever as a long-term survivor. It was based in 1929, earlier than an enormous US stock-market crash triggered the Nice Melancholy. Additionally, over 3.4bn of the world’s 8bn folks use Unilever merchandise daily. In different phrases, its manufacturers aren’t simply well-known, they’re in every single place.
Proper now, Unilever shares provide a dividend yield of three.4% a yr, barely above the FTSE 100’s yearly money yield of three.2%. However the group has a decades-long historical past of elevating this yearly payout, plus its shares are usually much less risky than the general UK inventory market.
I sleep effectively at night time realizing that Unilever’s intensive portfolio of manufacturers — in magnificence and well-being, private care, house care, vitamin, and ice cream — sells as I snooze. Even throughout dramatic downturns, folks should wash, eat, and clear their garments, properties, and themselves.
Alas, the following worldwide recession is coming — the one query is when. In a downturn, customers often tighten their belts. This may possible hit Unilever’s revenues, margins, earnings, and money circulation. Even so, I see this inventory as a long-term maintain for its highly effective passive earnings!
