Pound for pound, the FTSE 100 is easily (in my view) the best place to shop for income stocks.
There’s been some dividend shocks down the years, okay. But over time, the dividends delivered by Footsie-listed companies have been superb, thanks to the index’s huge contingent of cash-rich companies with diverse revenue streams and leading positions in mature markets.
Among the exceptional dividend shares I own in my portfolio are Primary Healthcare Properties (LSE:PHP), Coca-Cola HBC (LSE:CCH), and Legal & General (LSE:LGEN). I’m confident they’ll deliver an enormous passive income today and long into the future.
Want to know why?
Trust exercise
Primary Healthcare Properties is one of the most dependable dividend stocks on sale today.
As a real estate investment trust (REIT), at least 90% of annual rental profits must be distributed to shareholders. By focusing on the ultra-defensive healthcare sector, too — and with most rents essentially government paid — it doesn’t need to worry about things like rent defaults.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
This stability is reflected in its long record of annual dividend growth dating back to the mid-1990s.
Like any share, Primary Healthcare isn’t totally without its risk, however. Changing NHS policy can impact property demand. Earnings can also come under pressure if interest rates rise, hitting the share price.
But City brokers don’t expect this to impact dividends any time soon. Payout growth is expected to continue for the next three years, meaning dividend yields of 7.6%, 7.8%, and 8% for 2025, 2026, and 2027 respectively.
Drinks hero
Coca-Cola HBC doesn’t have the enormous yields of my REIT. But it does have one of the greatest records of dividend growth on the FTSE 100.
Annual dividends have risen every year since the bottler’s shares listed in 2012.
Sector-leading positions in the stable consumer staples market are one part its impressive story. Margins are high, giving it fantastic cash flows. And thanks to a focus on many emerging markets, it enjoys diverse revenue streams and the rapid growth that underpins robust dividend growth.
Blended together, they make the company a true dividend superstar. City analysts expect payouts to keep rising by double digits through to 2027 at least, leaving dividend yields ranging from 3% to 3.6%.
It’s a top Buy to me, even despite high competition and intense cost pressures.
9.2% dividend yield
Legal & General is my favourite ‘all rounder’ for passive income, offering massive yields and payout growth.
Stripping out Covid disruption in 2020, dividends have risen every year for 13 years. Forecasts lasting to 2027 suggest this great record will continue, meaning dividend yields of 9% to 9.2%.
These bullish estimates are built on Legal & General’s stunning cash generation. With a 217% Solvency II ratio, only M&G has greater financial strength in the FTSE’s financial services sector.
Cash flows and profits can come under pressure when economic conditions worsen. Rising competition poses another challenge, highlighted by Aberdeen move into the pension risk transfer sector.
Still, I’m confident Legal & General’s leading position in a growing industry should keep supporting large long-term dividends.
