I’m building a list of the best dividend shares to buy for 2024. More specifically, I’m searching for FTSE 100 shares that could perform strongly if the global economy continues to struggle.
This week, the Organisation for Economic Co-operation and Development (OECD) said “growth has been stronger than expected so far in 2023, but is now moderating on the back of tighter financial conditions, weak trade growth and lower business and consumer confidence”.
It added that geopolitical tensions and a bigger-than-expected impact from central bank rate hikes present added threats to the economy.
Clearly, UK share investors need to tread carefully. The dangers to corporate profitability are high, and this casts a shadow over dividend projections for the new year.
Dividend forecasts fall
To illustrate the point, financial services giant AJ Bell recently took the knife to its own profit and dividend estimates in recent months. It now expects total payouts to reach £78.7bn in 2023, down from the £83.8bn it predicted during the summer.
What’s more, the firm said that “estimates for 2024 are dribbling lower as well”.
It noted there’s “an understandable degree of scepticism regarding FTSE 100 earnings and dividend forecasts for 2023 and 2024”, and that investor doubts reflect “ongoing inflationary and input cost concerns, higher interest bills, tax increases and the murky economic outlook”.
2 FTSE shares on my radar
So which UK blue-chip shares would be good to own in this climate? Well, I’m tipping National Grid (LSE:NG) to keep doling out index-beating and growing dividends in the next few years. It’s why I’m considering buying its shares for my Stocks and Shares ISA in December.
City analysts agree with my bullish outlook on dividends. As a result, the power transmission business carries large dividend yields of 5.7% and 5.8% for the next two financial years (to March 2024 and 2025) respectively.
High interest rates may prove a problem in 2024 given National Grid’s large debts. Yet its highly defensive operations mean it should still continue delivering large dividends. Constant demand for electricity and zero competition makes this a brilliant safe-haven share, in my mind.
Life insurer Aviva (LSE:AV) also looks like a solid pick for dividend income next year. It’s why I’m considering adding to my existing holding in the company. I opened a position in the FTSE firm back in October.
Aviva — which yields an impressive 8.3% for 2024 — may well see demand for its non-general insurance products slip if economic conditions tough. Sales of wealth, protection and retirement products often slip when consumers feel the pinch.
But a strong balance sheet means it should still be able to keep growing shareholder payouts. Its Solvency II shareholder cover ratio stood at a robust 200% as of September. Rock-solid financial foundations also gives the business scope to buy back more shares following the £300m it repurchased in the first half.
