The ten highest dividend yields in the FTSE 100
Rupert Hargreaves takes a look at the companies with the highest dividend yields in the UK’s blue-chip index
FTSE 100 companies are expected to return a total of £79.1 billion in 2022, compared to £78.5 billion in 2021 according to AJ Bell’s latest Dividend Dashboard which looks at the highest dividend yields in the FTSE 100.
Even though we’re now in 2023, the figures for 2022 are still relevant as many blue-chip companies have yet to declare their final dividends for 2022. These are usually announced after their full-year results (usually published in the first quarter).
Record FTSE 100 dividends expected in 2023
Payouts in 2022 were forecast to hit a record level, but as the economic outlook has deteriorated, analysts have revised their projections lower in recent months.
However, analysts are expecting dividends to hit a record in 2023, with the resource sector leading the way.
“Total dividends payments could be set to hit a new record in 2023, with a forecast payout of £85.8 billion to shareholders,” AJ Bell’s Dividend Dashboard report explains.
“Analysts do expect 2023 to (just) set a new record-high for FTSE 100 ordinary dividend payments even if profit growth is expected to slow (and then grind to a complete halt in 2024).”
“Pre-tax income is expected to rise by 10% in 2023 while ordinary dividends are seen rising by 8% to £85.8 billion. This may reflect the additional room for manoeuvre offered by 2022’s forecast dividend cover of 2.24 times, the best figure since 2012.”
With that in mind, here’s a list of the companies with the ten highest dividend yields in the blue-chip index.
The highest dividend yields in the FTSE 100
Company | Dividend per share for 2022* | Dividend per share for 2023* | 2023 dividend yield (%) | 2023 p/e* |
M&G (LSE: MNG) | 19.3p | 20.0p | 9.5 | 10.9 |
Glencore (LSE: GLEN) | $0.44 | $0.56 | 9.5 | 6.5 |
Phoenix Group (LSE: PHNX) | 49.1p | 52.5p | 8.4 | 8.3 |
Harbour Energy (LSE: HBR) | 25.3p | 29p | 8.3 | 2.8 |
Vodafone (LSE: VOD) | 8.9c | 9.1c | 8.1 | 11.3 |
Legal & General (LSE: LGEN) | 19.4p | 20.4p | 8.0 | 7.4 |
Aviva (LSE: AV) | 32.8p | 34.8p | 7.9 | 8.1 |
HSBC (LSE: HSBA) | $0.32 | $0.59 | 7.7 | 7 |
British American Tobacco (LSE: BATS) | 218p | 245p | 7.6 | 8.2 |
Taylor Wimpey (LSE: TW) | 9.5p | 8.8p | 7.3 | 11.6 |
*Refinitiv broker estimates
Can investors trust these companies to deliver?
This list of the top-income stocks in the FTSE 100 has changed notably over the past few months.
It used to be dominated by homebuilders, but there’s now only one representative from this sector on the list, Taylor Wimpey. Analysts have dropped their dividend estimates for these companies sharply as the outlook for the UK housing market has deteriorated.
The insurers' Phoenix Group and Legal & General as well as the miner Glencore are the only stocks that have maintained a consistent presence on the list over the past six months.
I think all three of these companies look attractive from an income perspective.
Phoenix and Legal will be able to capitalise on the ever-growing demand for pensions and financial services in the UK. In these markets size matters as the biggest players can keep costs low (and profits high) freeing up more cash for their investors. Considering this growth potential, I’d back both FTSE 100 firms.
Glencore is the world’s largest commodity trader – it’s primed to profit from the global commodities boom that’s underway, powered by years of underinvestment in the sector.
Still, a word of warning for investors who’re considering resource stocks. This sector is highly volatile.
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The author owns shares in Phoenix Group and British American Tobacco