FTSE 100 dividends: the top 10 yields

We look at the 10 stocks with the highest dividend yields in the FTSE 100 and discuss if you can depend on these blue-chips for income.

the city of london at sunset
Record FTSE 100 dividends are expected
(Image credit: © Getty Images)

FTSE 100 companies are expected to return a total of £78.7bn in 2023 to shareholders via dividends, according to AJ Bell’s latest Dividend Dashboard. The report considers the highest dividend yields in the FTSE 100 and can be a good place to start when looking for investments

This figure has been downgraded from earlier forecasts thanks to fears of a recession, rising interest rates and volatile commodity prices.  

FTSE 100 dividends feel the heat 

At the end of 2022, AJ Bell’s analysts were projecting a record dividend haul from FTSE 100 companies, surpassing the all-time high of £85.2bn returned in 2018. 

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Falling profits across the blue-chip index are to blame for lower income projections. 

“Pre-tax profits across the FTSE 100 are expected to rise by 10% in 2023, a cut from the 19% growth estimate of just three months ago, thanks in the main to reduced profit forecasts at the miners, where China’s economic woes weigh heavily upon sentiment.” AJ Bell’s Dividend Dashboard report explains. 

However, while falling profit forecasts are “cutting into dividend estimates” even the “4% dividend growth in 2023 would handily outpace the expected 13% drop in adjusted net income.”

Companies may be scaling back dividend plans, but they’re ramping up share buybacks as an alternative way to return cash to investors. 

“FTSE 100 firms have to date announced £46.6bn of share buybacks in 2023,” explains the report. “That already exceeds the peaks of 2006 and 2018, which came in between £33bn and £34bn and leaves 2022’s record high of £58.2bn within reach, with three months to go,” it adds.

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 

Swipe to scroll horizontally
CompanyDividend per share for 2023*Dividend per share for 2024*2023 dividend yield (%)2023 p/e*
Phoenix Group (LSE: PHNX)52.6p54.1p11.66.7
M&G (LSE: MNG)20.1p20.5p10.610.2
British American Tobacco (LSE: BATS)239p249p9.76.5
Legal & General (LSE: LGEN)20.3p21.4p9.79.7
Imperial Brands (LSE: IMB)146p153p9.25.6
Vodafone (LSE: VOD)7.9c7.9c9.110.6
Glencore (LSE: GLEN)47c37.6c8.88.8
Aviva (LSE: AV)32.4p34.3p8.410.1
Taylor Wimpey (LSE: TW)9.4p9.4p8.412.1
HSBC (LSE: HSBA)63c80c8.16.1

 *Refinitiv broker estimates 

 Can investors trust these companies to deliver?  

This list is dominated by companies in the financial services sector. Pension giants Phoenix, M&G, Legal & General and Aviva, all offer inflation-beating dividend yields. 

These businesses are more likely to offer sustainable dividends than most as they’re highly regulated. Therefore, they’ll only pay what they can afford to and are allowed to by the regulator. Also, cash flows from the management of pension assets and insurance products offered are relatively predictable over the long term. This means management has a lot more visibility over cash flows and can set dividends accordingly. 

The outlook for other companies on the list is a bit more uncertain. Banks HSBC and Natwest benefit from higher interest rates, which means they can charge more to borrowers. However, if the economy starts to stutter, they may have to deal with higher loan write-offs in their portfolio. They’re also likely to have to pay out higher rates of interest to savers to keep their business. This could hit profit margins and force the lenders to reduce shareholder returns to focus on profits. 

Tobacco giants Imperial and British American have their own set of problems. These companies are highly cash-generative, but sales are under pressure from declining smoking rates around the world and both have a lot of debt. These borrowings have become a lot more expensive in the current interest rate environment. 

Vodafone is in the same situation. It has a lot of debt and high capital spending requirements, which will continue to put pressure on its dividend. 

Finally, Taylor Wimpey’s cash return plans are dependent on the UK housing market. If house prices continue to fall, the builder might have to cut its dividend to preserve cash. Still, with the country’s housing market structurally undersupplied, demand for its properties could remain robust. 

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Rupert Hargreaves

Rupert is the Deputy Digital Editor of MoneyWeek. He has been an active investor since leaving school and has always been fascinated by the world of business and investing. 

His style has been heavily influenced by US investors Warren Buffett and Philip Carret. He is always looking for high-quality growth opportunities trading at a reasonable price, preferring cash generative businesses with strong balance sheets over blue-sky growth stocks. 

Rupert was a freelance financial journalist for 10 years before moving to MoneyWeek, writing for several UK and international publications aimed at a range of readers, from the first timer to experienced high net wealth individuals and fund managers. During this time he had developed a deep understanding of the financial markets and the factors that influence them. 

He has written for the Motley Fool, Gurufocus and ValueWalk among others. Rupert has also founded and managed several businesses, including New York-based hedge fund newsletter, Hidden Value Stocks, written over 20 ebooks and appeared as an expert commentator on the BBC World Service. 

He has achieved the CFA UK Certificate in Investment Management, Chartered Institute for Securities & Investment Investment Advice Diploma and Chartered Institute for Securities & Investment Private Client Investment Advice & Management (PCIAM) qualification.