Looking for the best stocks to buy to turbocharge some passive income in the New Year? The Footsie is home to many great stocks with long histories of delivering large and growing dividends. Here are three I think savvy investors should seriously consider today.
| FTSE 100 stock | 2025 dividend yield | Annual dividend per share movement |
|---|---|---|
| Taylor Wimpey (LSE:TW) | 7.7% | +3% |
| M&G | 10.4% | +3% |
| Rio Tinto | 6.2% | -2% |
Dividends are never, ever guaranteed. As we saw during Covid-19, even blue-chips with rock-solid balance sheets can cut, suspend, or cancel dividends when crises occur.
But if broker projections prove correct, a £20,000 lump sum invested equally across these shares will produce a full-year passive income of £1,620.
Here’s why I think they’re worth serious consideration today.
Taylor Wimpey
Dividends at housebuilders like Taylor Wimpey could be compromised by tough economic conditions in the UK. They could also be stumped by rising inflation that impacts interest rate movements.
But the direction of travel in the UK housing market is highly encouraging. Average home prices are 1.4% higher year on year in December, according to Rightmove.
The property website says home values will rise 4% year on year in 2025 “with forecast mortgage rate drops set to further improve affordability and stimulate market activity.”
Against this backdrop, Taylor Wimpey is expected to grow earnings 23% and 18% in 2025 and 2026, respectively, supporting predictions of sustained dividend growth.
I hold shares of this Footsie builder in my portfolio. And I plan to hold them for the long haul as the UK’s surging population drives demand for new homes.
M&G
M&G is another share whose earnings could fly if interest rates fall further. That’s even though the financial services sector in which it operates is ultra competitive.
Thanks to a strong balance sheet, the savings and investment specialist looks in good shape to continue paying large and growing dividends even if profits underwhelm. Its Solvency II ratio rose even further above regulatory requirements of 100% as of June, at 210%.
I expect M&G to deliver strong long-term returns as awareness of the importance of financial planning increases. With operations spanning the UK, Europe and Asia, the business has great opportunities to exploit across multiple markets.
Rio Tinto
Dividends at mining stocks like Rio Tinto are highly sensitive to economic conditions. This is the case in 2025, when earnings and payouts are tipped to fall as trouble in China saps commodities demand.
Still, this isn’t expected to dent this FTSE 100 miner’s long record of paying market-smashing dividends. City analysts’ impressive payout forecasts for next year reflect Rio’s strong balance sheet, its low net-debt-to-EBITDA ratio sitting at just 0.4 as of June.
This is well below a range of between one and two that’s generally considered healthy for mining businesses. It also provides the business with capital to invest for growth, positioning it to benefit from the upcoming commodities supercycle and creating additional potential to increase dividends over time.
