Forecasts for FTSE 100 shares have been scaled back of late. But analysts still expect a bumper year for dividends this year.
At the last count, according to investing services company AJ Bell, the consensus suggested a payout from the UK’s top index of £78.7bn.
That’s just ordinary dividends and doesn’t include any specials. Or share buybacks.
And they expect 2024 to come close to the all-time FSTE 100 dividend record set in 2018.
Earnings rises
It comes on the back of a predicted 10% rise in pre-tax profits this year. And by far the biggest chunk should be from the financial sector.
No wonder then that banks and insurance stocks are high on my dividend favourites list.
I wouldn’t buy all these in a new portfolio as I’d want more diversification. But, right now, I think these are the dividend stocks I’ll most likely choose from in 2024.
| Stock | Recent price | 1-year change | 5-year change | Dividend yield 2023 | Dividend yield 2024 |
| Barclays | 150p | -13% | -11% | 5.5% | 6.4% |
| Lloyds Banking Group | 47.5p | -0.4% | -12% | 5.5% | 6.0% |
| Legal & General | 245p | -6.3% | +5.5% | 8.1% | 8.5% |
| Aviva | 431p | -3.5% | -13% | 7.4% | 7.9% |
| M&G | 218p | +17% | -22% | 9.2% | 9.5% |
| British American Tobacco | 2,361p | -30% | -14% | 10.0% | 10.3% |
| National Grid | 1,080p | +5.7% | +27% | 5.3% | 5.5% |
| Taylor Wimpey | 142p | +32% | +3.9% | 6.9% | 6.7% |
| Land Securities Group | 708p | +5.5% | -21% | 5.9% | 6.0% |
| Glencore | 453p | -17% | +57% | 8.1% | 4.4% |
Not the biggest
These aren’t the biggest dividend yields. In fact, I’ve left off one particular big hitter, Vodafone. It’s forecast to pay 12%, but there’s a lot I don’t like about Vodafone’s approach to cash and debt.
Glencore might seem a strange choice, with such a low yield for 2024. But estimates vary, and the consensus is for a rise back to around 6% by 2025. It’s a cyclical business, but I see a long-term cash cow.
I also have a few relatively low yields, in the 5% range. But each one is a stock where I see a high chance of long-term growth. And I rate that as more important than a bigger short-term yield.
Finance risk
There’s a fair bit of finance sector risk here, for sure. And with the Bank of England dashing hopes of any quick interest rate cuts, we could still have a rocky time ahead.
What about builders and real estate? Those were almost untouchable for most of 2023, but they’re coming back. And I can only see long-term demand and long-term profits.
So again, I’d be happy to take the clear risk in the short term.
Old favourite
Why have I never bought National Grid shares? Only because I keep seeing something I like better. Still, even with the uncertainty over the future of gas, today’s dividend forecasts could finally make it a buy for me.
And then, British American Tobacco has faced fears for the end of the business for years. But I rate it as the one most likely to proper from new products. And, again, I see lots of future cash.
