3 FTSE 100 shares that could make it rain dividends in 2025

3 FTSE 100 shares that could make it rain dividends in 2025


Image source: Getty Images

Analysts expect £83.6bn in dividends from the FTSE 100 in 2025, according to AJ Bell, a 6.5% increase over last year. That translates into a forecast forward dividend yield of 3.9%.

Of course, this is an index-wide snapshot. Some individual stocks offer much more, including M&G (LSE: MNG) and Phoenix Group, which are both yielding over 10%!

Here, I’ll look at three FTSE 100 financial stocks that could make it rain dividends in my investing account.

10%+ yield

To start, I can’t ignore M&G. Shares of the wealth management and investment firm are currently offering an eye-popping 10.4% yield.

Better still, City analysts see the payout edging up another 3% this year, to 20.7p per share. Were this to come to fruition (bearing in mind that dividends aren’t assured), it places the forward yield at 10.8%.

In other words, investors could hope to receive nearly 21p back off every share they buy at today’s price of 190p. Just writing that makes me want to shut the laptop and reach for my phone to buy some shares!

Steady on though, there are risks to bear in mind. As an asset manager, M&G is exposed to the vagaries of financial markets, while competition is stiff. Also, the rise of passive investing continues to offer long-term challenges to the asset management industry, at least for active managers.

However, the bearish sentiment towards many FTSE 100 financial stocks looks overdone to me. M&G is due to publish last year’s earnings in March. If there isn’t anything to be alarmed about in the report, I may add some shares to my portfolio to target the otherworldly income.

8% yield

Next is Aviva (LSE: AV.). The company is already a UK insurance giant, yet is set to get even bigger after agreeing a deal to buy rival Direct Line for £3.7bn. If approved, this would significantly strengthen Aviva’s position in motor insurance.

Mind you, it would also add risk, as sizeable acquisitions like this don’t always work out. The share price has gone nowhere since the announcement, suggesting investors are lukewarm.

Looking ahead however, Aviva is forecast to hike its dividend by 7% to 38p per share this year. That translates into an attractive 8% dividend yield.

Meanwhile, the stock looks cheap, trading at a price-to-earnings multiple of 9.8. I’m happy to keep holding my Aviva shares for now

6.6%

Finally, there’s HSBC (LSE: HSBA). The Asia-focused bank has enjoyed a strong rally, with its shares now trading at a multi-year high of 790p. Yet the forecast yield for 2025 is still 6.6%, well above the FTSE 100 average.

Meanwhile, the company has been buying back a load of its shares. In October, it announced a new $3bn buyback, following on from the last one worth $3bn. Indeed, by the end of September, it had already forked out $18.4bn on dividends and buybacks for the year. So the bank is in a good place right now.

That said, HSBC makes the bulk of its profits in Asia. Were these markets, particularly China, to suffer during a new trade war under Donald Trump, that could cause volatility in earnings.

Yet, with the shares still trading cheaply and offering a 6.6% yield, I like the risk/reward setup here.



Source link

Share:

Facebook
Twitter
Pinterest
LinkedIn

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular

Social Media

Get The Latest Updates

Subscribe To Our Weekly Newsletter

No spam, notifications only about new products, updates.

Categories