Owning dividend shares can be a good way to boost one’s passive income. Some large blue-chip companies pay juicy dividends that I would happily take to the bank. Here is a trio of FTSE 100 shares I would buy today for their 8%+ yields if I had spare cash to invest.
M&G
Investment manager M&G (LSE: MNG) currently yields 9.6%.
Not only that, but its dividend policy is to maintain or increase the payout annually. Dividends are never guaranteed, but this year M&G raised its annual dividend by 7%.
Investment management is big business. The sums involved mean that even small commissions can soon add up. With a customer base of millions in over two dozen markets, M&G benefits from broad reach and a well-recognised and trusted name.
Economic turbulence could be a risk for the firm. If customers have less money to invest or start withdrawing funds, revenues and profits could fall. But I like this FTSE 100 share with its near double-digit yield and currently own it.
British American Tobacco
Another FTSE 100 stock in my portfolio is British American Tobacco (LSE: BATS).
It has a progressive dividend policy and has raised its payout annually for decades. The current yield is 8.6%.
This week, the Lucky Strike maker announced that it remains committed to its strategy although performance in its US cigarettes business in the first half has been “disappointing“.
As an existing shareholder, that concerned me. The US is a key market for the company. Declining cigarette sales are a long-term risk for sales at British American.
However, with its strong brand portfolio and growing non-cigarette business, I reckon the company could continue to generate large free cash flows for a long time to come. That could help fund dividends.
Phoenix
While the name may not be very familiar, Phoenix (LSE: PHNX) is a life insurance company with 13m customers.
Life insurance is not a racy business but can be a profitable one. The company was loss-making last year, but that reflects accounting rules that can make it difficult to compare an insurer’s financial performance from one year to the next as an investor.
The dividend yield is 9% and the payout has grown annually in recent years. I think there is room for it to keep growing in coming years. One risk I see is swings in market returns hurting earnings at the firm. Volatile stock markets can play havoc with life insurers’ actuarial assumptions, meaning they set aside bigger future provisions, leading to lower profitability.
But I like Phoenix’s proven operational capabilities and steady, low-key approach to running what is a large and important business. I would happily add this one to my portfolio at some point.
