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I used to be taking a look at some prime FTSE 100 dividend shares not too long ago, and my eye once more fell on Phoenix Group Holdings (LSE: PHNX) and its forecast 10.6% yield.
I labored out that if I make investments £200 per thirty days in Phoenix Group, after 20 years I may have sufficient to pay me an annual passive revenue of round £16,000.
That makes plenty of assumptions, although. Just like the dividend would stay unchanged for the following 20 years. Oh, and the share value wouldn’t change both.
No easy experience
Anybody who’s checked out occasions within the monetary sector over the previous 10 years will most likely dismiss the prospect of both of these occurring right away.
Phoenix is in a notoriously cyclical enterprise. And if earnings volatility ought to harm the dividend one 12 months, I worry the share value may undergo.
Nonetheless, forecasts look good, and I feel Phoenix might be a pleasant addition to a long-term Shares and Shares ISA. However I’d desire a good little bit of diversification to assist handle my dangers.
Lengthy-term security
a few of the different FTSE 100 dividend yields on supply now, I simply can’t ignore Taylor Wimpey.
There’s a 6.4% dividend yield on supply. It could nonetheless be a pleasant annual return if it may hold going. Within the quick time period, although, I feel that most likely raises the most important warning.
Fellow builder Barratt Developments has lower its dividend, given strain on the property sector. And Taylor Wimpey may do the identical.
However the actual attraction to me is the very long-term nature of the enterprise. The UK’s housing scarcity, plus boundaries to new companies attempting to get in, make me suppose I see a money cow right here.
With security in thoughts once more, I feel I’d add Tesco to a long-term revenue portfolio if I used to be beginning now. The dividend is modest at 3.8%, however I’d hope for secure whole returns.
Controversial
My ultimate two options listed below are maybe a bit controversial, for various causes.
One is British American Tobacco, with a 9.9% dividend yield. It’s maybe a bit dodgy from an ethics standpoint. And lots of traders suppose the tobacco business is doomed anyway.
However I feel tobacco merchandise might be with us for a really very long time. And purely from a monetary view, I can see one other money cow right here.
My fifth alternative is BT Group, with its large debt pile the most important downside I can see. Oh, and the share value slide of the previous 5 years hasn’t helped whole returns, even when the dividend has been good.
Nonetheless, after posting what might be a turnaround set of FY outcomes, BT has upped its dividend once more. If it may hold its 6%+ yields going, perhaps I may simply take the money and never fear about anything.
Complete returns
Talking of whole returns, the common Shares and Shares ISA has managed 9.6% per 12 months prior to now decade.
That’s forward of the very long-term UK inventory market efficiency. However I reckon there might be sufficient low cost dividend shares within the FTSE 100 to offer us a great crack at it.
