The FTSE 100 is full of the biggest and most consistent companies. I find it useful to scour the index to find the most lucrative income opportunities. While I enjoy looking for growth stocks, FTSE 100 dividend shares can further diversify my long-term portfolio. I’ve found three businesses with dividend yields of over 8%. I think they could be great additions to my current holdings in May. Let’s see why.
Dividend share #1: A FTSE 100 homebuilder
The first dividend share I’m interested in is Persimmon (LSE:PSN), a UK-based homebuilder, running three house building brands. It currently trades at 2,112p.
Most recently, it carried a dividend yield of 8.2%, or 125p per share. As a potential investor, the possibility of this level of passive income is very appealing.
What’s more, for the three months to 31 March 2021, the company was trading in line with expectations. It had a forward order book worth around £2.8bn. For the year, group revenue surged 8.4% to £3.6bn, as demand for newbuild homes increased.
With interest rates rising, however, I wonder if this might deter potential homeowners from seeking mortgages. This may have a knock-on effect on Persimmon’s operations.
Dividend share #2: Rio Tinto
Secondly, Rio Tinto (LSE:RIO) is a producer of commodities like copper and iron ore. It most recently had a dividend yield of 12.9%, or $10.40 per share. It currently trades at 5,664p.
The company is currently benefiting from higher prices in aluminium, copper, and iron ore. Furthermore, it reported a profit before tax of $30.8bn in 2021, more than double the profit before tax in 2020.
Despite this, iron ore shipments were down for the three months to 31 March and production had fallen 6.2% year on year. This is mainly caused by supply chain problems and labour shortages. I see these problems as short-term in nature and they could subside over a longer period of time.
Dividend share #3: Antofagasta
Finally, Antofagasta (LSE:ANTO) is a metals producer based in Chile. It specialises in copper. It currently trades at 1,516p.
Most recently, it had a dividend yield of 8.5%, equivalent to $1.43 per share.
Its profits before tax grew markedly between 2020 and 2021, from $1.4bn to $3.4bn. Like Rio Tinto, it is also benefiting from higher commodity prices as inflation grips the world.
It recently reiterated its 2022 copper guidance of between 660,000 and 690,000 tonnes. Despite this, its overall copper production for the three months to 31 March declined by about 22%, year on year. Much of the is attributable to a drought in part of Chile. I would like to see these production figures improve in the near future.
Overall, these three companies have solid foundations and are paying healthy dividends to shareholders. To increase my passive income, I will be buying shares in all three firms in May to balance this way of building wealth with the growth stocks I already hold.
