The Motley Fool

For big share dividends, I’m looking to buy into these 12 FTSE 100 giants!

Image source: Getty Images.

Last week, I wrote about how UK share dividends slumped in 2020, crashing by a massive £50.7bn. After Covid-19 restrictions arrived last March, many companies decided to cut, cancel or suspend their shareholder payouts. However, with mass vaccinations under way and lockdowns to be relaxed eventually, company earnings may rebound. A number of FTSE 100 heavyweights should return to paying regular dividends. And that’s good news for dividend investors and lovers of passive income like me.

Share dividends to recover in 2021?

I’m very hopeful that UK share dividends will bounce back this year, not least because I have a windfall to invest. In a couple of months, I will put another £300,000+ in cash to work in our family portfolio. I hope for this lump sum to generate an annual passive income of £12,000+. That’s a modest income yield of 4% a year — something that can be generated by high-yielding FTSE 100 shares. And with investment firm A J Bell predicting total UK dividends of £70.8bn this year, I want to grab my fair share for my family.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

The biggest dividends come from the largest businesses

Not every UK-listed company pays dividends. In fact, most don’t and instead reinvest their profits into growth. As a result, UK share dividends are extremely concentrated, with the lion’s share being paid by a handful of global giants. In fact, more than half of this year’s dividends will come from just 12 Footsie heavyweights.

Right now, I’m worried that US stocks are in a bubble phase, making them too expensive for me. I’ve decided to reduce my portfolio risk by investing heavily in boring, reliable British businesses. Ideally, I’m on the lookout for lowly rated UK stocks that pay generous share dividends.

The 12 Goliaths of the FTSE 100

With warning signs of investor mania and market madness emerging, I prefer to invest in businesses that I think should be able to ride out any storm. For example, these 12 FTSE 100 firms all have market values above £40bn, making them among the biggest payers of UK share dividends. I’ve also added the forecast 2020 dividend for each share.

Company | Market value | 2020 forecast dividend

  • Royal Dutch Shell |£109.3bn | £4.2bn
  • Unilever |£105.3bn | £3.9bn
  • AstraZeneca £96.3bn | £2.8bn
  • HSBC Holdings | £87.1bn | £1.3bn
  • Rio Tinto | £78.1bn | £4.0bn
  • Diageo | £71.2bn | £1.6bn
  • GlaxoSmithKline | £64.0bn | £4.0bn
  • British American Tobacco | £63.1bn | £4.9bn
  • BP | £56.6bn | £4.4bn
  • BHP Group | £47.7bn | £1.9bn
  • London Stock Exchange Group | £46.0bn | £0.3bn
  • Reckitt Benckiser Group | £44.9bn | £1.2bn

I want my share of 2021’s share dividends

The total market value of these dozen giants comes to just short of £870bn. That’s close to half of the market capitalisation of the FTSE 100. And these 12 stocks’ combined cash dividends for 2020 come to a whopping £34.5bn. That’s close to half of all the dividends expected to be paid by Footsie firms for that year.

As a value investor seeking bumper dividends, I’m attracted to these dividend dynamos. Who wouldn’t want to share in almost £3bn a month of regular cash payments? That’s why my future focus will be on investing in several of these. This should help me to generate a passive income. And I’ll be making full use of tax-free Stocks and Shares ISAs and pensions to capture these bumper dividends.

Bit I always remember that company dividends aren’t guaranteed. They can fall or be cancelled without notice, as we gloomily discovered in 2020.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Cliffdarcy owns shares in GlaxoSmithKline. The Motley Fool UK has recommended Diageo, GlaxoSmithKline, HSBC Holdings, and Unilever. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.