Dividend investing can be a great way to grow my wealth. But it’s also important to check if the dividend is likely to be maintained, or even better, to get bigger.
Let’s take a look at how I screen for high-dividend-paying stocks with payments I can count on.
Tracking the FTSE 100
One strategy I’ve considered is simply tracking the FTSE 100 to grow my wealth. I could buy the iShares FTSE 100 ETF and generate a dividend yield of about 3.6%. However, I want to aim a bit higher than 3.6%.
I’m going to use a stock screen to search the FTSE 100 index. This way I can find companies to buy with higher dividend yields than the FTSE 100.
FTSE 100 dividend screen
First, I screen for companies that offer 5%+ dividend yields. A 5% yield is attractive. above inflation and could help me grow my wealth.
I also want to make sure these companies are going to keep paying me a dividend as dividends are not guaranteed like an interest rate at a bank. To do this, I add another screen to give me some comfort that a high dividend yield will be maintained.
I do this is by looking at forecast dividend growth in the year ahead. This way, I expect that a 5% or more dividend yield is likely to be maintained if the business is able to grow the dividend next year, although it’s still not guaranteed, of course.
The results
The first stock I found that offered a 5% dividend yield is Legal & General. It’s an investment management and insurance company, and offers an attractive 6.3% dividend yield that should grow next year.
Next is National Grid. The company operates the infrastructure that ensures gas and electric get to our homes. It operates in the utilities sector that’s defensive in nature, so it should offer a dependable dividend stream for my portfolio. The current dividend yield is 5.3% that’s also forecast to grow into the following year.
Finally, the last stock from my screen is British American Tobacco. This company has fallen out of favour of late given the push towards Environmental, Social and Governance investing strategies. However, the company is developing a new product range that moves away from combustible cigarettes. BATS offers an 8.6% dividend yield for my portfolio, which is also set to grow next year.
Risks and final thoughts
I think these three FTSE 100 stocks offer me attractive dividend yields that are all forecast to grow next year. But with any dividend strategy, there’s always the risk that the dividend will be cut. If trading deteriorates for either of these companies, then I might not achieve my 5% yield target. But, with forecasts saying the dividends will grow, I’m looking to buy the shares for my portfolio to boost my wealth.
