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Dividends

FTSE 100's Hidden Gem: Reliable Income Stocks Reveal Dividend Secrets

Strategic Insights

— 2 min read

The London stock market is often overlooked for its exciting tech giants, but it offers a treasure trove of reliable income stocks. The FTSE 100 index boasts an average dividend yield of 3.6pc, significantly higher than its S&P 500 counterpart. While dividend expectations may dip this year due to some companies cutting payouts, the FTSE 100 remains one of the highest-yielding markets in the world. For investors looking to supplement their income or turbocharge their portfolios, reliable income stocks like those in the FTSE 100 are worth exploring.

Key Takeaways:

  • The FTSE 100 index offers an average dividend yield of 3.6pc, compared to 1.2pc for the S&P 500.
  • An investor who put £100 a month in the FTSE 100 for 10 years, totalling £12,000, would have £14,764 today, but £18,132 if they had reinvested the dividends.
  • Legal & General Forward yield: 8.2pc - The financial services group is one of the highest-yielding stocks in the FTSE 100, with a strong track record of income payments, including an uninterrupted dividend for the past decade.
  • Aviva Forward yield: 6pc - Insurer Aviva has had an impressive year, with shares up 35pc, driven by increased protection and annuity sales.
  • Primary Health Properties Forward yield: 7.5pc - Healthcare landlord PHP stands to benefit from the Government's 10-year NHS plan, with increased spending on infrastructure and proposals to shift care from hospitals to the community.
  • National Grid Forward yield: 4.38pc - National Grid reduced its dividend yield by a fifth this year, but its current yield of 4.38pc is still considered robust, as it converges with its growth ambitions.
  • NatWest Forward yield: 4.8pc - The bank had a strong start to the year, with a modest forward dividend yield, but its balance sheet is strong, positioning management to invest in the business or return cash to shareholders.

Statistics:

  • The FTSE 100 index boasts an average dividend yield of 3.6pc.
  • An investor would have £14,764 today if they invested £100 a month in the FTSE 100 for 10 years, totalling £12,000.
  • Legal & General has an forward yield of 8.2pc.
  • Aviva has grown its yield by 12pc per year on average over the past five years, according to analysis by Fidelity.
  • Primary Health Properties has increased its dividend for 29 consecutive years.

Sources:

  • The FTSE 100 is sometimes referred to as "investing backwater" owing to its limited number of high-growth companies.
  • According to analysis from investment firm Fidelity, an investor who put £100 a month in the FTSE 100 for 10 years -- totalling £12,000 -- would have £14,764 today, but £18,132 if they had reinvested the dividends.
  • Susannah Streeter, of stockbroker Hargreaves Lansdown, said: "The balance sheet is in a very strong position, which supports ambitious return plans."
  • Jemma Slingo, of Fidelity, said: "Although it sounds counterintuitive, investors shouldn't get too obsessed with big dividend yields."
  • The FTSE 100 has an average dividend yield of 3.6pc, compared to 1.2pc for the S&P 500.

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