Picture supply: Getty Photos
The FTSE 100 index has been delivering sturdy returns for many years now. Because the mid-Eighties, the Footsie has delivered a mean annual return of 8%. This includes of roughly 4% in capital positive aspects, and one other 4% in dividend revenue.
That is fairly good. However I’m assured that I could make an even-better return by shopping for high-dividend shares. Listed here are three on my radar right now.
WPP
Ahead dividend yield 5%.
Promoting company WPP (LSE:WPP) hasn’t had a straightforward time of late. Weak advertising and marketing spending, and notably within the North American tech sector, has hampered its skill to develop revenues.
Gross sales dropped 1.4% within the first quarter. The highest line could keep beneath strain too, if rates of interest stay at present ranges.
However my enthusiasm for WPP shares stays undimmed. The enterprise, which supplies communications and promoting providers in 100 nations, has monumental scale and tight relationships with blue-chip firms throughout a number of sectors.
I believe it can bounce again sharply when financial situations enhance, helped by its pivot to the fast-growing digital advert market.
Phoenix Group Holdings
Ahead dividend yield 11.1%.
The dividend yield at Phoenix Group Holdings (LSE:PHNX) could also be arduous to imagine. However the pensions, life insurance coverage and financial savings big has an extended document of offering giant and rising shareholder payouts.
That is thanks largely to its skill to create spectacular quantities of money. The FTSE 100 agency generated a whopping £2bn value of money in 2023, up £500m and above its goal of £1.8bn. It additionally hit its goal of producing £1.5bn of recent enterprise money a full two years forward of plan.
And as of December, its Solvency II capital ratio was 176%. This was on the prime finish of the agency’s 140-180% goal, and supplies present dividend projections with added power.
A phrase of warning although. Phoenix’s earnings might come beneath pressure if rates of interest stay at present ranges. On this situation, shopper spending could wrestle, whereas asset values would even be adversely impacted.
Aviva
Ahead dividend yield 7.6%.
Like Phoenix Group, Aviva (LSE:AV.) has vital scope to develop as Britain’s aged inhabitants soars in measurement. The corporate — which additionally has operations in Canada — supplies life insurance coverage, pensions, well being safety and wealth administration, giving it a number of methods to take advantage of ongoing demographic adjustments.
Competitors within the monetary providers sector’s fierce. And the corporate has to paddle extraordinarily arduous to develop earnings. However its market-leading place throughout a number of product traces signifies it has the instruments and the knowhow to succeed.
Aviva is, for example, the main life insurance coverage supplier within the UK, the place it holds almost 1 / 4 of the market.
An formidable strategy to digitalise its operations might additionally assist Aviva to outperform its friends over the long run. Current steps embrace utilizing synthetic intelligence (AI) to assist it course of claims, and overhauling its digital platforms to spice up cross-selling prospects.
