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Once I first dabbled in investing 20 years in the past, I didn’t pay a lot consideration to FTSE 100 dividend shares. In actual fact, I didn’t actually understand how dividends labored and even whether or not I bought to maintain them.
Share value development was all I cared about. So I ended up with a rag-tag bunch of once-whizzy shares that had caught my eye for no matter cause. I’ve discovered so much since then.
I nonetheless purchase development shares. In 2024, I’ve loved stellar returns from non-public fairness specialist 3i Group, FTSE 250 insurer Simply Group, and engineer Costain Group. Over 12 months, their shares are up a surprising 65.72%, 93.07%, and 60.94%, respectively.
I don’t simply purchase development shares
Inevitably, I’ve had my share of losers too. Makes an attempt to catch falling knives Aston Martin, Ocado Group, and Burberry Group all proved foolhardy.
Fortunately, I’m nonetheless forward total, and even higher, holding a ramification of FTSE 100 dividend shares has helped to maintain issues ticking over.
In the present day, the FTSE 100 financials sector is a wealthy supply of dividends. I maintain Authorized & Normal Group, M&G, and Phoenix Group Holdings.
Their trailing yields must be seen to be believed at 8.51%, 9.74%, and 10.05%, respectively. They smash the return from any financial savings account.
Sadly, their shares have floundered over the past 12 months. L&G is up a modest 5%, M&G has slipped 2.46%, and Phoenix has climbed 10.7%. This has been a tricky yr for the monetary sector, on account of bumpy inventory markets and sticky rates of interest. But I’ve nonetheless bought my dividends (and sure, I do get to maintain them).
Traders can nonetheless rise up to five% a yr on money or bonds with out placing their capital in danger. As soon as rates of interest fall, financial savings charges and bond yield will observe however dividends received’t. With luck they’ll rise, as corporations improve earnings and share the spoils with traders. As with investing, nothing is assured.
My Taylor Wimpey shares have taken a beating
I’m holding a detailed eye on one portfolio holding, home builder Taylor Wimpey (LSE: TW). Simply a few months in the past, I used to be sitting on a complete 12-month return of round 50%, together with reinvested dividends. Not anymore.
The Taylor Wimpey share value has slumped 19.75% within the final three months, as rate of interest minimize hopes fade and mortgage charges climb. In an additional blow, subsequent April’s nationwide insurance coverage and minimal wage hikes will jack up hiring prices and squeeze the group’s margins. Over one yr, the inventory is down 3.61%.
But I feel the Taylor Wimpey sell-off has been overdone. This morning we discovered that home costs climbed for the fifth consecutive month in November to a file £298,083, in response to Halifax. They’re up 4.8% over the yr.
If rates of interest fall subsequent yr, Taylor Wimpey shares may stage a restoration. Both manner, I’m nonetheless getting my dividends. The trailing yield is now a bumper 7.44%. It seems dependable, given the corporate’s strong stability sheet.
Most shares undergo good occasions and dangerous occasions. The attraction of dividend shares is that with luck, the earnings ought to roll in all through. That’s why I’m basing my retirement round FTSE 100 dividend heroes like Taylor Wimpey. Plus some development shares, after all.
