We can’t spend share prices on a chart. But dividend cash is real money, and it goes straight in our pockets. UK dividend shares have had a few ups and downs in recent years.
But the UK stock market must be one of the best long-term cash generators ever.
And right now, while a lot of share prices are depressed, I think we could be looking at one of the best times to start buying dividend shares in ages.
Dividend payouts from FTSE 100 stocks have been soaring. In 2018, companies in the top index paid out a whopping £85.2bn in total.
That stumbled when companies cut their 2019 dividends in response to the pandemic. But some were forced to, by regulators. And with hindsight, it probably wasn’t necessary.
And now, according to AJ Bell‘s Dividend Dashboard, dividend forecasts for 2022 have already reached £85bn. That’s only a shade short of the record. And there has to be a good chance of beating it by the end of the year.
Forecasts put the overall FTSE 100 dividend yield at 4.2% now, which is good. But there are some cracking individual yields on offer too.
Barclays and Lloyds, two of the banks forced to suspend their dividends in the pandemic, are both on forecast yields of around 5% now. Both should be very well covered by earnings, suggesting potential for progressive rises in future years.
One of my long-term favourites, National Grid, is on a predicted 2022 dividend yield of close to 4%. With its clear revenue outlook, I rate it as one of the most reliable.
The market has punished housebuilder share prices. But dividend yields are up as a result. Including a special dividend for returning excess capital, Persimmon‘s total forecast stands at 12%. And Taylor Wimpey is on 8%.
The FTSE 250 is home to some tempting dividend shares too. And it’s not just the same old sectors of finance, housing and energy.
Synthomer, for example, has cut its interim dividend by more than 50%. That was inevitable, after the demand for its latex gloves during the pandemic fell back. But even adjusting for that suggests a full-year yield of 6.7%.
Computer services firm Micro Focus International has a predicted yield of 6%. And Royal Mail‘s is up to 8%.
These are only forecasts, and might not prove accurate. And they vary from source to source. They often only go on published figures too, and ignore things that we know are likely to happen.
It was fairly clear that mining dividends would be lower this year. But some sources stuck to their huge forecasts until interim dividend cuts were confirmed.
But generally, at least when aggregated to provide general trends, I’ve always found dividend forecasts a useful guide.
We also face a pretty severe economic outlook. And we really don’t know what pressure dividends might suffer in the next 12 months.
So might 2022 turn out to one of the best years to start investing in dividend shares ever? Looking back over the past decade, I can’t see a better one.
The post Is this the best time in a decade to start buying FTSE 100 dividend shares? appeared first on The Motley Fool UK.
Are you on the lookout for UK growth stocks? If so, get this FREE no-strings report now while it’s still available.
You’ll discover what we think is a top growth stock for the decade ahead… and the performance of this company really is stunning. In 2019, it returned £150 million to shareholders through buybacks and dividends.
We believe its financial position is about as solid as anything we’ve seen.
- Since 2016, annual revenues increased 31%
- In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
- Operating cash flow is up 47%. (Even its operating margins are rising every year!)
Quite simply, we believe it’s a fantastic Foolish growth pick. What’s more, it deserves your attention today! So please don’t wait another moment…
setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#FFFFFF”, ‘color’, ‘#FFFFFF’);
- Director dealings: Rolls-Royce, Admiral, Dunelm
- I’d start investing in the FTSE 250 with these 2 stocks
- 3 reasons I’d aim to earn extra income by investing £1,000 in dividend shares
- Stocks of the week: Aviva, Antofagasta, Just Group
- Selling for pennies, are Rolls-Royce shares a value trap?
Alan Oscroft has positions in Lloyds Banking Group and Persimmon. The Motley Fool UK has recommended Barclays, Lloyds Banking Group, Micro Focus, and Synthomer. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.