Whenever I look at the FTSE dividend outlook, it just keeps getting better. City analysts now think 2023 could be the third best year ever for cash returns from FTSE 100 shares.
The FTSE 250 is more associated with growth stocks than cash. But right now, I see dividend yields there in double digits too.
Broker forecasts can vary, so some might find different figures to me. But the table below shows the 10 stocks in the UK’s top two indexes with the biggest forecast yields I can find.
| Stock | Index | Recent price | 1-year change | 5-year change | Dividend yield |
| Diversified Energy Co. | FTSE 250 | 93p | -18% | -22% | 15.7% |
| Liontrust Asset Management | FTSE 250 | 678p | -24% | -0.5% | 11.2% |
| Vodafone | FTSE 100 | 74p | -44% | -58% | 10.7% |
| M&G | FTSE 100 | 204p | -2.3% | -9.2%* | 10.2% |
| Phoenix Group Holdings | FTSE 100 | 558p | -7% | -17% | 9.7% |
| British American Tobacco | FTSE 100 | 2,664p | -25% | -33% | 9.2% |
| Energean Oil & Gas | FTSE 250 | 1,115p | -0.6% | +102% | 9.5% |
| Crest Nicholson Holdings | FTSE 250 | 222p | -14% | -43% | 9.2% |
| OSB Group | FTSE 250 | 361p | -28% | -18% | 9.0% |
| Taylor Wimpey | FTSE 100 | 117p | -3% | -34% | 9.0% |
The top 10 are split evenly between the FTSE 100 and FTSE 250. But a lot of these have one key thing in common.
Share price pain
They’ve mostly suffered share price falls, and that’s pushed the yields up. It’s not like they have so much cash they just want to shove as much of it our way as they can.
There’s more drama than this shows too. Liontrust, at number two in the table, has seen its shares lose 70% since their peak of August 2021.
So, I’d be cautious of the top yields. My confidence in them is not great, and I’d want to do some careful research before I’d think of buying.
Share prices aren’t all gloom, though. The housebuilders have started to tick up, given a boost by June inflation coming in lower than feared.
Which to buy?
This is just a start, and I’d use it to narrow down my search for FTSE dividend stocks. But most of these would pass this first check.
I’d also look at some of the great dividend shares that are just outside the top 10 too.
In the FTSE 100, Imperial Brands (8.1% yield), Aviva (8%) and Rio Tinto (8%) just miss out. And in the FTSE 250, there’s Ashmore (8.4%) and Target Healthcare REIT (7.5%).
And we mustn’t forget the big banks, with Lloyds Banking Group on a forecast 5.4% and Barclays at 4.7%. Those aren’t the top yields, but I like the long-term cash flow prospects for bank stocks.
Spoilt for choice
We need to be cautious here. Just because a yield is forecast doesn’t mean it’ll be paid. Sometimes analysts get it wrong. Sometimes the wheels come off.
But I reckon there should be enough here to keep dividend investors happy. We don’t always see times that offer this much choice.
