When it comes to the FTSE 100, many investors use the main index to pick stocks for income. With an average index yield of 3.31%, it’s not a bad place to start. However, some might be able to get a similar yield from a high-interest savings account.
But with active investing, some shares can be found that have double the dividend yield of the index. Here are two for consideration.
High occupancy rates
The first idea is Land Securities Group (LSE:LAND). The stock currently has a dividend yield of 6.91%, with the share price down 5% over the last year.
It’s the largest commercial property development and investment company in the UK, operating as a real estate investment trust (REIT). Being a REIT means that to keep the favourable status it has to pay out the bulk of its earnings as dividends. Therefore, straight off the bat, it’s an appealing option for income, as it’s a priority for the management team.
It primarily makes money from rental income. This is a core revenue stream, especially from well-located, high-demand properties. The latest full-year report from May showed occupancy rates stood at 97.2%. This was the highest level in five years. So looking forward, the trend of high occupancy levels from tenants bodes well.
Indeed, the fall in the shara price has partly helped to push the yield higher. One factor in this is the continued concern about commercial property demand. Lots of companies have pivoted to more remote or flexible working, meaning demand for office space isn’t what it once was. This is a risk going forward, but the management team are focusing on allocating more to residential, which should help to ease the problem.
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High yield and rising share price
Another stock is M&G (LSE:MNG). The UK-based financial services company provides asset and wealth management services to both corporates and individuals. The dividend yield sits at an impressive 7.71%, well over double the FTSE 100 average. Over the past year, the stock’s up 29%. This makes the high yield even more outstanding as, typically, if the share price rises, it acts to push down the yield.
The company has been doing well, with the 2024 results showing a 5% increase in operating profit versus the prior year. Interestingly, the report noted “given our confidence in the outlook for the business, we are moving to a progressive dividend policy, starting with a 2% increase in the 2024 total dividend per share”.
Again, this focus on dividends could help to keep income payments flowing in the future. Aiding this is the continued cost saving plan, which was upgraded recently from £200m to £230m of cumulative savings by the end of 2025. Lower costs should mean higher profits.
One worry is investor flows. Given the potential for high volatility in the coming months from US tariffs and continued conflicts in the Middle East and Europe, people might pull their money from M&G and keep it in cash. This would reduce the management fees the company earns.
I think both shares are worth thinking about by investors seeking high-yield options for income.
