We here at The Motley Fool spend vast amounts of time explaining why the stock market is one of the best investment destinations for your hard-earned cash. How so? Well, latest figures from Hargreaves Lansdown show exactly how.
During the third quarter total dividends shelled out by UK-listed firms hit a record £32.3bn, the financial services colossus advised. And excluding the contribution of special dividends, the total also came to an all-time high of £31.6bn between July and September.
I’ve long argued that the FTSE 100 in particular is a great place to go shopping, and October’s painful sell-off has made the index an even more appetising place for dividend chasers in particular to load up.
Hargreaves Lansdown said that “while share prices have been heading downwards, profits have generally remained stable or even been growing. And because dividends are generally a function of profits, they’ve climbed too.”
Britain’s blue-chip bourse may have steadied following last month’s weakness but it continues to trade at a 10% discount to May’s closing highs of around 7,877 points. And Hargreaves Lansdown, citing numbers from Bloomberg, noted that as a consequence, the FTSE 100 now boasts a prospective yield of 4.7%.
Some titanic dividend picks
Of course dividends are the product of past profits and are not necessarily an indicator of future returns.
Indeed, there are plenty of reasons to understand why investors are becoming gloomier about the outlook for the global economy and therefore the earnings potential of some of London’s largest-listed firms, including (but not exclusive to) the uncertainty surrounding the Brexit saga; rising trade tensions between the US and China; tightening monetary policy on both sides of the Atlantic Ocean; and the growing political strain between the West and Saudi Arabia, Iran and Russia.
These troubles mean that I’m far from enthused by many of the big yielders on the Footsie. I’d be very happy to give Lloyds (and its 5.7% prospective dividend yield) a miss owing to the threats to its bottom line caused by the cooling UK economy. Meanwhile evaporating customer numbers at Centrica and SSE, numbers that are likely to rise as household budgets become ever-more pressured, mean that I’m content to swerve past these firms and their forward yields of 7.7% and 8.6%, too.
That said, there still remains an abundant number of rock-solid, big-yielding shares on the FTSE 100 that are worth serious attention today, like the housebuilders Persimmon, Barratt Developments and Taylor Wimpey. Obviously they’re not immune to any Brexit-related shocks, but given the size of the country’s housing shortage, I’m still convinced that they can continue generating solid profits growth. And these firms have forward yields of between 8.4% and 9.9% today.
I’m also convinced that the defensive nature of GlaxoSmithKline and AstraZeneca should enable them to vault the aforementioned geopolitical and macroeconomic problems in 2019 and possibly beyond. And they sport inflation-bashing forward yields of 5.1% and 3.4% respectively.
This is just a taster of some of the top-class FTSE 100 dividend shares on sale today, however. So maybe it’s time to grab a cup of coffee and start searching!
Do you want to retire early and give up the rat race to enjoy the rest of your life? Of course you do, and to help you accomplish this goal, the Motley Fool has put together this free report titled "The Foolish Guide To Financial Independence", which is packed full of wealth-creating tips as well as ideas for your money.
The report is entirely free and available for download today, so if you're interested in exiting the rat race and achieving financial independence, click here to download the report. What have you got to lose?
Royston Wild owns shares in Taylor Wimpey and Barratt Developments. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended AstraZeneca, Hargreaves Lansdown, and Lloyds Banking Group. 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.