3 FTSE 100 dividend stocks I’d never sell

These FTSE 100 (INDEXFTSE:UKX) shares should provide dividends for life.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The best way to fund a comfortable retirement, in my view, is to hold a diversified portfolio of top-quality FTSE 100 shares paying steady dividends. Here are three that I reckon fit the ‘dividends for life’ bill.

Insurance cash

The insurance industry was hit by the financial crisis, and Legal & General (LSE: LGEN) shareholders took a dividend haircut. But the annual cash payment was only depressed briefly and soon started climbing again — over the past five years we’ve seen dividends come storming back, way ahead of inflation.

In 2016, the firm paid out a very attractive yield of 5.8%, and that’s forecast to rise to 6.1% this year and 6.4% next. But how reliable is that likely to be?

Should you invest £1,000 in BP right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if BP made the list?

See the 6 stocks

When 2016 results were released early in March, the insurer reiterated its progressive dividend policy, “reflecting the group’s expected medium term underlying business growth.” Liquidity measures looked good and the balance sheet was strong, and I really can’t see the insurance sector getting itself overstretched again any time soon.

And if you remain aware that any single sector can have a bad few years and you keep your income sources diversified, I reckon Legal & General should keep you well rewarded for many years.

What disaster?

If you were asked to name a disaster company, it would be hard not to think of BP (LSE: BP). We had the Deepwater Horizon catastrophe and then the company had to face a lengthy oil price slump.

But you know what? The dividend was briefly slashed to help pay for the Gulf of Mexico cleanup, but it was quickly reinstated and started rising again. And it has been maintained right through the down spell for oil prices. BP chief Bob Dudley said we were probably in for a few years of cheap oil, but that the firm intended to keep paying its dividend. He’s kept his word.

There’s a forecast yield of 6.8% on the cards this year and though it won’t be covered by forecast earnings, cover should be regained by 2018. That’s based on the current outlook with oil at around $50 per barrel — and I can’t see how it can stay that low for much longer without some of the oil-producing nations going bust.

If the recent dividend performance shows what BP can do during one of its worst spells ever, just think what the long-term future should hold.

Post profits

Royal Mail Group (LSE: RMG) is another long-term dividend favourite of mine, with a nicely progressive policy that delivered a yield of 4.7% in the year to March 2016. There’s a hike to 5.6% predicted for this year, and analysts are expecting that to be lifted as high as 6% by 2019.

On the downside, it’s not exactly an exciting business with great growth on the cards — in fact, earnings are likely to be pretty flat over the next three years. But dividend cover by earnings should be strong at around 1.7 times, and I reckon that makes a big difference to the safety of the annual payout. Plus I can see efficiency improvements in the coming years meaning we’ll see a steady stream of cash sufficient to keep investors happy for a long time to come.

We’re also looking at P/E ratios of only around 10, so any sign of rising earnings could bring an uprating of the share price too.

AI Revolution Awaits: Uncover Top Stock Picks for Massive Potential Gains!

Buckle up because we're about to dive headfirst into the electrifying world of AI.

Imagine this: you make a single savvy investment in some cutting-edge technology, then kick back and watch as it revolutionises entire industries and potentially even lines your pockets.

If the mere thought of riding this AI wave excites you and the prospect of massive potential returns gets your pulse racing, then you’ve got to check out this Motley Fool Share Advisor report – 'AI Front Runners: 3 Surprising Stocks Riding The AI Wave’!

And here’s the kicker – we’re giving you an exclusive peek at ONE of these top AI stock picks, absolutely free! How’s that for a bit of brilliance?

Get your free AI stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended BP. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

At a 52-week low but forecast to rise 73%! Is this growth share the FTSE’s top recovery play? 

This FTSE 100 growth share has taken an absolute beating over the past two years but Harvey Jones says the…

Read more »

Investing Articles

This FTSE 250 share offers a juicy 9.8% yield. Will it last?

This well-known FTSE 250 share has a percentage dividend yield approaching double digits. Should Christopher Ruane add the income share…

Read more »

Investing Articles

Is a £333,000 portfolio enough to retire and live off passive income?

A third of a million pounds can generate a serious amount of passive income, but relying on this sum alone…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing For Beginners

Why FTSE 100 investors should pay attention to ‘Liberation Day’

Jon Smith explains why the upcoming tariff announcement from across the pond could have an impact on the FTSE 100,…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

Here’s why Nvidia stock fell 13% in March

The Nvidia stock price rise was looking unstoppable. Should investors now be wondering if the same might be true of…

Read more »

US Stock

It’s ISA deadline week! Here’s my 3-step game plan

Jon Smith tries to calm the hype around the last minute ISA rush to buy stocks and explains why he's…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

£10,000 invested in BAE Systems shares at Christmas is now worth…

BAE Systems shares have been surging in the FTSE 100 in 2025, driven higher by the wavering US commitment to…

Read more »

Investing Articles

Up 19% in 2 weeks, can the Tesla share price rebound further?

Tesla's first-quarter delivery numbers came out today. Will they help persuade our writer to invest his money at the current…

Read more »