A quarter of FTSE 100 firms offer a dividend of over 6%

A total of  26 companies in the FTSE 100 are forecast will pay a dividend of 6% or more in 2019.

Seven of these are forecast to yield in excess of 8% and 4 of them over 10%.

However, average dividend cover across the 26 stocks is just 1.56 so investors need to proceed with caution.

The FTSE 100 as a whole is currently expected to yield 4.8% for 2019. This is helped by a forecast of 9% dividend growth to a new all-time high aggregate payment of £92.6bn.

		2019 forecast	2019 forecast
		dividend yield (%)	dividend cover (x)
1	Evraz	15.3%	1.34 x
2	Taylor Wimpey	11.9%	1.12 x
3	Persimmon	11.5%	1.15 x
4	Imperial Brands	11.1%	1.34 x
5	BT	8.5%	1.61 x
6	Aviva	8.3%	1.92 x
7	Standard Life Aberdeen	8.1%	0.87 x
8	Rio Tinto	7.8%	1.66 x
9	Barratt Developments	7.5%	1.58 x
10	British American Tobacco	7.5%	1.54 x
11	Legal and General	7.5%	1.81 x
12	Centrica	7.2%	1.43 x
13	Phoenix Group	7.1%	1.21 x
14	Royal Bank of Scotland	6.9%	2.09 x
15	HSBC	6.9%	1.41 x
16	BP	6.7%	1.26 x
17	Royal Dutch Shell	6.6%	1.23 x
18	Lloyds	6.6%	2.19 x
19	BHP Group	6.6%	1.32 x
20	ITV	6.5%	1.63 x
21	SSE	6.4%	1.11 x
22	Glencore	6.3%	1.15 x
23	WPP	6.3%	1.67 x
24	Barclays	6.1%	2.35 x
25	Admiral Group	6.1%	1.01 x
26	International Cons. Airlines	6.0%	3.58 x
	Average	7.8%	1.56 x

 

Russ Mould, investment director at AJ Bell comments: “A combination of recent share price weakness and unchanged forecast dividend payments means there are some very attractive looking dividend yields on offer from the largest companies on the UK stock market.  The question now for investors is whether these are really as attractive as they look or whether they fall into the ‘too good to be true’ category.

“Such a fat yield from the UK’s blue chip index looks extremely tempting compared to the Bank of England’s 0.75% base rate for cash and the UK ten-year Gilt, where the yield has retreated from 1.26% at the start of the year to just 0.45%.

“The dividend yield on offer may be one reason why the FTSE 100 is confounding the bears with a year-to-date gain of nearly 7% in capital terms, despite all of the prevailing political and economic uncertainty.

“The absolute dividend yield – and also the huge premium represented by the equity yield relative to the ten-year Gilt yield – suggests that UK stocks are cheap a lot of bad news may already be priced in.

“The chunky yield suggests that companies are aware of the importance of dividends to investors in a low-interest-rate world and are working hard to accommodate yield-hungry investors. But management must be careful that they are not over-paying and under-investing to curry short-term favour to the long-term detriment of their business’ competitive position and therefore its ability to generate cash and offer dividends.