Stock market

Dividend yield up to 11.1%: 3 FTSE 100 passive income shares to consider

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gave FTSE 100 The index has been delivering strong returns for decades now. Since the mid-1980s, the Footsie has averaged an annual return of 8%. This includes about 4% of capital gains, and another 4% of dividend income.

it’s awesome. But I believe I can make even better returns by buying high-yielding stocks. These are the three on my radar today.

WPP

Forward dividend yield 5%.

Advertising Agency WPP (LSE:WPP) hasn’t had an easy time of late. Weak marketing spend, and particularly in the North American tech sector, has hampered its ability to grow revenue.

Sales fell 1.4 percent in the first quarter. If interest rates remain at current levels, the top line may also remain under pressure.

But my enthusiasm for WPP shares has not lasted. The business, which provides communications and advertising services in 100 countries, has extensive and strong relationships with blue-chip companies in a number of sectors.

I think it will bounce back quickly when economic conditions improve, helped by its pivot to the fast-growing digital advertising market.

Phoenix Group Holdings

Forward dividend yield 11.1%.

Profit generation Phoenix Group Holdings (LSE:PHNX) may be hard to believe. But the pension, life insurance and savings company has a long record of large and growing shareholder payouts.

This is largely thanks to its ability to generate fantastic amounts of cash. The FTSE 100 firm generated £2bn worth of cash in 2023, up £500m and above its target of £1.8bn. It also hit its target of generating £1.5bn of new business cash, a full two years ahead of schedule.

And as of December, its Solvency II capital ratio was 176%. This was at the upper end of the firm’s 140-180% target, and provides current dividend estimates with added strength.

A word of warning though. If interest rates remain at current levels, Phoenix’s earnings may come under pressure. In this scenario, consumer spending may struggle, while asset values ​​will also be adversely affected.

Aviva

Forward dividend yield 7.6%.

Like the Phoenix Group, Aviva (LSE:AV.) has plenty of room to grow as the UK’s aging population continues to grow. The company – which also has operations in Canada – provides life insurance, pensions, health protection and wealth management, giving it multiple ways to capitalize on ongoing demographic changes.

Competition in the financial services sector is fierce. And the company has to pedal very hard to increase profits. But its market-leading position in multiple product lines indicates it has the tools and the means to succeed.

Aviva, for example, is the largest life insurer in the UK, where it has almost a quarter of the market.

An aggressive approach to digitizing its operations could also help Aviva outperform its peers in the long run. Recent initiatives include using artificial intelligence (AI) to help process claims, and overhauling its digital platform to boost cross-selling opportunities.


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