Dividend forecasts can be a big help for those of us investing for income. We need to take care, though, as the City can get them wrong.
But with that in mind, I’m having a look at the 10 biggest dividend yields in the FTSE 100 right now. Different sources say different things, so these are based on Yahoo! Finance.
| Company | Recent price | 12-month change | 5-year change | Dividend yield |
| M&G | 199p | -4.9% | -11% | 9.8% |
| Phoenix Group Holdings | 573p | -6.7% | -17% | 9.2% |
| Vodafone | 92p | -31% | -56% | 8.7% |
| British American Tobacco | 2,830p | -13% | -24% | 8.1% |
| Legal & General Group | 253p | -7.6% | -7.9% | 7.7% |
| Taylor Wimpey | 123p | -6.3% | -36% | 7.7% |
| Imperial Brands | 1915p | +15% | -20% | 7.5% |
| Aviva | 419p | -27% | -39% | 7.4% |
| Barratt Developments | 489p | -3.8% | -13% | 7.4% |
| abrdn | 201p | +1.8% | -52% | 7.0% |
The first thing I see is a lot of share price falls. In fact, not a single one is up over five years. And all bar one show falls in double digits.
Weak sentiment
What does that say to me? I think it means a lot of folk expect to see dividend cuts this year. So there might not be a lot of trust in these forecasts right now.
I think some of the fear is well placed too. Vodafone, for example, has paid high yields for years but with only bare cover by earnings at best.
It might look good to be paying 8% and more. But I think the market can see through it. Just look at the size of those price falls. They’re the biggest of the bunch, over both 12 months and five years.
Fears overdone
I think other fears, though, are overdone. We have a couple of house builders in the list. And that doesn’t surprise me at all. Property prices are dipping, and that drives investors away.
There is a risk to the dividends, but I can only see it being a short-term thing. I fully expect the cash to flow in the long term, in a market with a huge shortage of supply.
I’d say the market has got it wrong about the tobacco firms too. For years, they’ve expected the demise of the business, but they’ve been dead wrong so far. The risk of a decline clearly is there. But I see a cash cow here, for a good few years yet.
Financial risk
Financials like investment managers and insurance firms are on big yields due to those share price falls. That also doesn’t surprise me.
The economy is weak, and that’s when the finance sector suffers. The banks are down too, but dividend yields for the big ones are around 5%. They’re not in the top 10 by yield, but I rate bank stocks among the best buys now.
I can’t help wondering what might happen if I bought all 10 of these in my 2023 Stocks and Shares ISA. I won’t do that. But, you know, I think it could be a no-brainer winner.
I might come back next year and see how things have gone.
