The Footsie’s up around 10% in the past 12 months, but there are still plenty of dividend shares with high yields on offer.
The following table shows the five biggest forecast yields, at the time of writing, together with the change from last year’s dividend and 12-month share price changes.
Company
Dividend yield
Dividend change
12m price change
Phoenix Group Holdings
(LSE: PHNX)
10.4%
+2.8%
+6.8%
M&G
9.9%
+1.9%
-2.5%
Legal & General
9.3%
+4.8%
-4.0%
British American Tobacco
7.9%
+1.0%
+17%
Taylor Wimpey
(LSE: TW.)
7.3%
-0.7%
+2.8%
(Sources: Yahoo, MarketScreener)
Just imagine, we could have a portfolio of five FTSE 100 stocks with an overall forecast yield of 9%. It wouldn’t offer the best diversification though, with three financial services stocks and two of those in insurance.
Today, I’m going to look at two of them in very different businesses, namely Phoenix Group and Taylor Wimpey. Here’s how their share prices stack up:
Forget the short term
Hmm, those overall five-year performances aren’t that far apart. But they’ve ploughed very different furrows over some short-term spells. Look at the divergence in the 2020 stock market crash, for example, when housebuilders like Taylor Wimpey slumped.
My lesson? Never invest in shares unless I plan to hold them for at least five years, ideally a decade or more. I’m definitely not going to try to time my entry points as there’s no way I’d have known how to pick the bottoms in that chart.
And, maybe, just go for a diversified dividend selection and don’t fret too much about which sectors are likely to do best?
Property first
Seeing Taylor Wimpey fall hard in response to the pandemic really came as no surprise. The inability to move freely makes it a lot harder for us to buy houses. And then the inevitable inflation hit later, bringing higher interest rates.
Inflation could still get worse as we enter a spell of rising global trade wars. So there’s clearly a risk of further pressure on the Taylor Wimpey share price. And even by 2026, forecasters still expect the dividend to be little more than half its 2019 level, though they do have it rising.
But the housing market has a more reliable long-term demand outlook than most, doesn’t it?
Insurance favourite
The insurance sector can be very volatile. And I expect my insurance holdings to have more ups and downs than most. Analysts expect Phoenix to lose money again this year after several years of losses. But they see that reversing, with decent earnings growth on the cards up to 2026.
With FY earnings in September, the company said it’s “on track to deliver our financial targets which support our progressive and sustainable dividend“.
The company’s changing its business though, as its old strategy of buying up closed life assurance funds is drying up. So uncertainty there in a sector that’s already very uncertain.
My buys for 2025?
I already hold insurance and housebuilder shares. But these two are definitely on my list for next year when I want to top up my favourite sectors.
The post These are the FTSE 100’s top dividend shares going into December appeared first on The Motley Fool UK.
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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco P.l.c. and M&g Plc. 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.
