The FTSE 100 currently has five stocks with dividend yields of between 9% and 10%. That’s more than double the index average of 3.8%.
In this piece I’m going to comment on each of these and take a longer look at the share I’ve chosen for my own portfolio.
Let’s start with a look at the five stocks in question:
|
Company |
2024 forecast dividend yield |
|
Phoenix Group |
10.0% |
|
M&G |
9.6% |
|
HSBC Holdings |
9.5% |
|
Legal & General (LSE: LGEN) |
9.3% |
|
British American Tobacco |
9.3% |
Why are these dividend yields so high?
The dividend yield of a stock is the value of the dividend as a percentage of its share price. A company with a dividend of 10p per share and a share price of 100p will have a 10% yield.
One reason why these dividend yields are so high is that these companies all trade on low price-to-earnings (P/E) ratios.
For example, British American Tobacco trades on a forecast P/E of seven with a 9.3% yield.
If BAT’s share price rose so…
