As global stock markets plunge, bargain hunters can get some incredible rates of income from FTSE 100 dividend stocks.
Three of the companies I hold in my self-invested personal pension (SIPP) now yield 10% or more. One is closing in on a jaw-dropping 12%. That’s a truly stunning rate of income.
All three are all in the financials sector: Phoenix Group Holdings (LSE: PHNX), M&G (LSE: MNG) and Legal & General Group (LSE: LGEN).
Should you invest £1,000 in Edinburgh Worldwide Investment Trust Plc 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 Edinburgh Worldwide Investment Trust Plc made the list?
There’s a lot of crossover here, but I hold 20 FTSE stocks in total, so have diversified by investing in other sectors too.
All three were already dishing out generous payouts but thanks to today’s market turmoil, they’ve become even more attractive. That said, this isn’t free money. Each carries risks, especially in today’s unpredictable climate.
Phoenix Group Holdings is a huge income share
Phoenix is a closed-book life insurer, which means it mainly manages policies taken over from other firms. That’s helped keep things fairly stable, and I’ve always liked its income focus. Today, it offers a meaty 10.86% yield. But its share price has slipped 7% in the last week, and is still 4% lower than a year ago.
Phoenix also holds a massive £280bn investment portfolio to back its insurance liabilities. Right now, that’s falling in value. While I still believe in the company’s ability to pay dividends, I’m watching closely.
Last month, it increased the final 2024 dividend by a solid 2.6%. If today’s market volatility continues, next year’s may be lower. It could be frozen or even cut. As yet, nobody knows.
For patient investors with a long-term view, Phoenix could still be a rewarding one to consider. That’s assuming current market chaos doesn’t do too much damage.
No company pays more than M&G
M&G currently offers the highest yield on the entire FTSE 100 – a staggering 11.53%. That figure alone will turn heads, and I won’t pretend it didn’t catch my attention. I hold the shares, but with my eyes wide open.
Over the last week, the M&G share price has fallen 9%, and over the past year it’s down nearly 13%.
As an asset manager, M&G is also heavily exposed to market mood swings. When investors panic, they pull money out, and that hits earnings. I still see long-term value here, but I’m also bracing for the possibility that this sky-high dividend may not be fully secure.
Legal & General also has a double-digit yield
Legal & General’s 10.02% yield may be the lowest of the three but is still remarkable. Again, there’s risk. The shares are down 9% in a week, and 13% over the year. The company also holds £1.2trn in assets tied to the markets, a number that is no doubt sliding as I write this.
The board was already planning to cut dividend growth from 5% a year to just 2% between 2025 and 2027, and that was before current turmoil. I’m not selling Legal & General either. I believe in its income potential and relative resilience, but I’m braced for a lot more bumpiness, and potential threats to the dividend.
I think any of these are worth considering today, for investors who are feeling brave. They should aim to hold for a minimum five years, and ideally much longer.
