There are four FTSE 100 stocks presently offering a yield in excess of 8%. Remembering that dividends are never guaranteed, here’s a quick look at each.
| Stock | Dividend – last 12 months (pence) | Share price (pence) | Yield (%) |
|---|---|---|---|
| WPP | 39.40 | 416 | 9.5 |
| Taylor Wimpey | 9.46 | 109 | 8.7 |
| Legal & General | 21.36 | 254 | 8.4 |
| Phoenix Group Holdings | 54.00 | 650 | 8.3 |
Troubled times
Given that it recently issued a profit warning, I think WPP (LSE:WPP) is the most likely to cut its dividend. Global macroeconomic uncertainty is causing many firms to reduce their advertising and marketing budgets. The group’s top and bottom lines are suffering as a result. Its margin is also coming under pressure.
Of fundamental concern, it’s facing a threat from artificial intelligence (AI) applications that are helping businesses bring the creative process in-house.
But despite its woes, the group’s still expecting to report £400m-£425m of operating profit for the first half of 2025. It also retains an impressive blue-chip client base and has won numerous awards.
However, I don’t want to invest. There’s too much uncertainty surrounding the stock – and the industry – for my liking.
Possible green shoots
Taylor Wimpey‘s (LSE:TW.) paid a dividend of 8.58p-9.46p for the last four years making it one of the most generous around. Impressively, it’s managed to do this against a backdrop of a struggling housing market. Rising interest rates and a post-pandemic squeeze on disposable incomes has dented confidence.
But there are signs that things might be picking up. Excluding joint ventures, it expects to sell 10,400-10,800 homes in 2025. Last year, it completed 9,972.
However, the housing market remains fragile and could slump again if interest rates don’t fall as expected. And it could be several years (if ever) before the group’s able to match its pre-Covid margin.
But with a strong balance sheet, lots of plots on which to build and a healthy order book (£2.26bn), Taylor Wimpey could be one to consider.
A history of dividend growth
Except for 2020 (when it kept it unchanged), Legal & General (LSE:LGEN) has increased its dividend every year since the financial crash of 2009. And it’s pledged to raise it by 2% per annum from 2025-2027.
In 2024, it reported a 6% year-on-year increase in core operating earnings per share. Even so, I believe its shares are attractively priced at around 12.6 times historic profit.
However, the group has over £500bn of investments on its balance sheet. A global slowdown could affect investment income and lead to a cut in its dividend. Competition could also impact earnings.
But the group’s robust balance sheet, impressive pipeline of new business and long track record of dividend growth could make it another stock to consider.
Born in 1782
Phoenix Group Holdings (LSE:PHNX) operates in the same sector as Legal & General and faces similar challenges from both well-established brands and newcomers. But its market-cap is less than half that of its larger rival, which means it has less financial firepower to withstand a downturn. And since July 2020, its share price has been flat.
However, its 2024 results were impressive. Compared to 2023, adjusted operating profit was up 31%, operating cash generation was 22% higher and assets under administration increased 11%.
The group owns some well-known brands, including Standard Life and SunLife, and has increased its dividend for the past six years. For these reasons, I think it’s a stock that investors could think about adding to their long-term portfolios.
