Investors could get an 8% average dividend yield from these FTSE 100 shares!

Passive income isn’t guaranteed. But our writer thinks these FTSE 100 shares should generate a chunky dividend stream to make the risk worth considering.

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Buying a selection of the highest-yielding FTSE 100 shares could generate huge amounts of passive income. With this in mind, here are three examples that I think investors should consider.

Big payer

Insurance giant Aviva (LSE: AV) hit the headlines recently after launching a £3.6bn takeover of peer Direct Line. But it’s the company’s income credentials that really catch the eye.

Using analyst estimates for FY25 (beginning in January) and the current share price, the £13bn cap boasts a monster 8% dividend yield.

Should you invest £1,000 in Howdens 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 Howdens made the list?

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Is this too good to be true? Not necessarily. As an investment, the company has been outperforming rivals this year. Sales and profits have been rising as well, supporting CEO Amanda Blanc’s strategy of continuing to streamline the business.

Created with Highcharts 11.4.3Aviva Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Notwithstanding this, Aviva has a rather erratic history when it comes to returning cash. Several years of consistent hikes have been cancelled out by big cuts, usually during times of general economic malaise. Speaking of which, there’s a chance things in the UK could sour when new tax hikes land in April.

But this risk is precisely why I think it makes sense to own a bunch of stocks if the goal is to receive more income than a bog-standard index tracker. So, let’s add two other big-yielders to the mix.

Buying opportunity?

After doing rather well for much of 2024, Taylor Wimpey‘s (LSE: TW) share price looks set to end the year below where it started.

Created with Highcharts 11.4.3Taylor Wimpey Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

The rout since October is mostly down to the recent bounce in inflation, pushing Bank of England Governor Andrew Bailey to ponder slowing the rate of interest rate cuts going forward. Such a development was never going to be good news for our already-battered housebuilders.

On a more positive note, there’s still an enticing income stream to compensate Taylor Wimpey’s investors. An estimated 9.62p per share will be sent out to owners in FY25. Using today’s share price, that becomes a stonking yield of 7.7%.

That distribution could be cut if earnings fall back. Profit is barely expected to cover next year’s total payout as it stands.

Nevertheless, the chronic undersupply of housing in the UK suggests to me that a reduction — if one even comes — will prove no more than a blip.

As things stand, this could be a good buying opportunity.

Smoking hot!

British American Tobacco (LSE: BATS) completes this trio of high-yielding, top-tier shares. It’s also the best performer by some margin in 2024, gaining nearly 30%.

At least some of this has been in response to positive updates on trading. A few days ago, the £66bn cap said that revenue growth in its new product category (including vapes and oral nicotine) had been stronger in H2, helped by more investment in the US.

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

But another attraction has surely been the dividends on offer. Looking ahead, the highly cash-generative firm’s shares are expected to yield an mouth-watering 8.2% in FY25. Assuming equal investments in each of the companies I’ve touched on, this would bring the average yield to 8% – more than double that of the FTSE 100 index!

Dwindling sales of cigarettes could impact that juicy dividend flow in time. But I reckon we’re still a long way from that happening.

Should you invest £1,000 in Howdens 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 Howdens made the list?

See the 6 stocks

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.

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco P.l.c. 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.

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