Footsie dividend shares are set for bumper cash payouts in 2025. And the index could also be on for a new annual record for share buybacks.
That’s what the latest outlook from AJ Bell‘s Dividend Dashboard says. Aggregated from stock market analysts, forecasts indicate £79.4bn in FTSE 100 dividends this year. And with the index also up 17% so far in 2025, I think it’s fair to call it a great year for UK investors.
Share buybacks help boost prices, as they lift future per-share measures like earnings and dividends. And with £50.9bn announced by the end of September, the all-time record of £58.5bn — set last year — is in sight.
Add the expected dividends and buybacks, and we’re looking at around £130bn in total FTSE 100 shareholder returns in 2025. That’s 5.5% of the total value of the index. Who wants all their money in a Cash ISA when something like this is on offer? Not me, that’s for sure.
Match the index
The 2025 outlook suggests a straightforward approach to long-term investing. That’s to consider an index tracker. We could buy shares in, say, iShares Core FTSE 100 UCITS ETF — which is simpler than its big name might sound. It just tracks the index with the aim of matching its growth and dividend returns.
It’s still open to general stock market risk, and bad years would be just as bad as the whole market. I also think investors should consider other similar exchange-traded funds managed by different companies — just to diversify in that direction too.
But as a way to invest some money in the stock market and then sit back for the long term — with no head-scratching or poring over financial reports — it could be hard to beat.
Beat the index?
Many investors have more time to spare, and we want to try to do even better than the cracking index performance I described above. In my case, I focus on sectors I think can generate strong long-term cash flow. I rate insurance as a key favourite.
I hold Aviva shares, but I’m also considering adding Legal & General (LSE: LGEN) to my Stocks and Shares ISA. The share price has been relatively flat for the past few years. But we’re looking at a hefty 9% forecast dividend yield.
Dividends aren’t guaranteed. And the insurance business can be one of the Footsie’s more volatile sectors. But AJ Bell points out that we haven’t seen a dividend cut from L&G in the past decade.
Cover and forecasts
I’m a bit concerned that forecast earnings for this year fall short of the predicted dividend. But with earnings expected to grow strongly in the next few years, my concern’s muted.
At interim time, CEO António Simões said: “We are delivering on our promise to return more to shareholders with over £5bn in dividends and share buybacks over three years.“
Volatility — of earnings and share price — still has to be the main risk. But I think investors wanting to maximise their share of FTSE 100 dividends should definitely think about Legal & General.
