These are my 3 top FTSE 100 dividend shares to consider buying right now

Despite a strong year for the UK stock market, we still have a large number of attractive Footsie dividend shares to choose from.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’m eyeing up some Stocks and Shares ISA investments over the winter, and my money will be mostly going into dividend shares.

My big problem is that there are so many attractive yields out there, it’s hard to choose.

If I had the cash ready today, a portion of it would almost certainly go into savings and investments manager M&G (LSE: MNG).

Should you invest £1,000 in Diageo right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Diageo made the list?

See the 6 stocks

The M&G share price has been flat for the past few years, and that’s helped push the forecast dividend yield as high as 9.5%.

Created with Highcharts 11.4.3M&g Plc PriceZoom1M3M6MYTD1Y5Y10YALL9 Apr 20208 Apr 2025Zoom ▾May '20Jan '21Sep '21May '22Jan '23Sep '23May '24Jan '25Jul '20Jul '20Jan '22Jan '22Jul '23Jul '23Jan '25Jan '25100150200250300www.fool.co.uk

No free money

There’s no such thing as risk-free cash, and we can never guaranteed a dividend. Sometimes, the earnings just aren’t there to cover it… which is exactly what happened to M&G in the last two years.

It still kept up the payments, though. And forecasts show the dividends should be covered by earnings in the next few years. But only just.

If they’re right, earnings per share (EPS) should bounce back this year, but then stay largely flat for the next two years. And EPS would cover the forecast dividends by only around 1.2 to 1.3 times.

So the dividend could come under pressure, and the shares could tank if we have a cut.

But the key reason I want to buy is that I think the UK stock market could be in for a long bull run. And if it is, investment managers should do well.

Torn

The next FTSE 100 dividend that I really like the look of leaves me torn, for ethical reasons. It’s British American Tobacco (LSE: BATS).

Despite a strong share price run this year, forecasts still put the dividend yield up at 8.5%.

Created with Highcharts 11.4.3British American Tobacco P.l.c. PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Clearly, the future of tobacco defines the real long-term risk. And I do think that smoking the stuff will eventually die out.

I reckon it could take a very long time to convince the billions in the developing world to kick the habit, though. And British American is leading the way with alternative ways of consuming it.

There’s a fair bit of guesswork on my part there, though. And we really don’t know what kind of market those vape things will eventually enjoy.

I probably won’t buy, simply because it’s tobacco. But I wish I could feel comfortable going for that fat dividend.

Buy the grid

I really should buy some National Grid (LSE: NG.), with its 5.5% forecast yield. I’ve been telling myself that for years, but I’ve never actually hit the button.

Created with Highcharts 11.4.3National Grid Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

I’m not really sure why, but it’s probably down to something else catching my eye each time I have the money. A bigger yield, maybe a growth stock, or a super cheap small cap.

Whatever it is, I’ve missed out on decades of what I reckon has turned out to be one of the Footsie’s best dividend stocks.

This year’s new equity issue, which has diluted the dividend a bit, shook confidence in National Grid. And having done it, will the company need to find more cash for expansion again?

That’s possible, and it could keep sentiment weak. But I must buy some one day.

But there are other promising opportunities in the stock market right now. In fact, here are:

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco P.l.c. and M&g Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Here’s the dividend forecast for Rolls-Royce shares as Trump rocks the markets

Rolls-Royce shares have joined in the volatility over the past week. However, with the direction being largely downwards, the dividend…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

Dividend yields of up to 11%! Here are 3 UK passive income stocks to consider

Searching for ways to supercharge your passive income with UK dividend stocks? Here are three that have grabbed our writer's…

Read more »

Young Caucasian woman at the street withdrawing money at the ATM
Investing Articles

£10,000 invested in NatWest shares at the start of 2025 is now worth…

NatWest shares surged into 2025, but things have become a little more complicated in recent weeks. Dr James Fox explores.

Read more »

Investing For Beginners

Why the FTSE 250 could outperform the FTSE 100 for the rest of the year

Jon Smith explains why the FTSE 250 could do better than its big brother when factoring in domestic exposure and…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Tariff fears send the Lloyds share price tumbling, but the dividend yield is climbing

Just when the Lloyds Banking Group share price had been rising steadily, along comes a global upheaval to knock it…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

Here’s how a stock market crash could help an investor retire years early

A stock market crash can be alarming -- but for the well-prepared investor, it can also be an exceptional opportunity…

Read more »

Investing Articles

1 key fact to remember in this stock market correction

This writer takes a look at a FTSE 100 investment trust that is catching his eye after the recent massive…

Read more »

Investing Articles

I was wrong about the Tesla stock price!

Tesla stock's been affected more than most by ‘Liberation Day’. But our writer has other concerns about Elon Musk’s company.

Read more »