I hate to tempt fate, but the FTSE 100 has been solidly above 8,000 points for nearly a month now.
That means some of its top dividend yields have dropped a bit. But I still see nice fat ones that I could line up for some long-term passive income.
These five might be my favourite dividend stock buys right now, on the following forecasts.
| Stock | Recent price |
Dividend 2024 |
Dividend 2025 |
Dividend 2026 |
| Phoenix Group Holdings | 508p | 10.4% | 10.8% | 11.0% |
| British American Tobacco | 2,460p | 9.5% | 9.9% | 10.4% |
| Taylor Wimpey | 148p | 6.4% | 6.5% | 6.5% |
| BT Group | 131p | 6.1% | 6.4% | 6.4% |
| NatWest Group (LSE: NWG) | 314p | 5.4% | 5.6% | 6.0% |
| Average yield | 7.6% | 7.8% | 8.1% |
Passive income
Those are cracking yields, even with the FTSE 100 on a 2024 surge. I think our top Footsie share prices could still have a fair way to go.
And I wonder if 2024 could turn out to be one of the best years to buy income stocks in a decade.
Taking home an annual 7.6% would be nice. But even better, reinvesting the money in new shares each year could help us build up a nice big pot by retirement time.
The best bank
As the months go by, my take on the best value bank stock changes. That’s inevitable as share prices move, and the outlook varies. And at the moment, it’s NatWest.
HSBC Holdings offers a bigger dividend, but I don’t want any China risk. Of the rest, NatWest’s dividend looks best to me, and the stock valuation is low too.
Also, the government is winding down its holding, taken on when the bank was known as Royal Bank of Scotland and was in need of a bailout.
When that’s all sold, and NatWest is again fully in free market hands, I think the share price might get an extra boost. But as it is, I hold Lloyds Banking Group, and I don’t want to add another bank just yet.
Finance risk
I have Phoenix Group in my list too, so I’m doubling up on my finance sector risk here. And with a weak economic outlook, it’s real risk.
NatWest, along with other banks, reported a Q1 profit fall. And Bank of England rate cuts, when they come, could hurt our banks’ lending margins. In today’s global scene, anything in finance and insurance could be in for a shaky year or two.
Still, the only reason I wouldn’t buy Phoenix now is that I own some Aviva shares. And like banks, one insurance firm is enough for me in 2024.
Long-term buys
Of the others, I bought some Persimmon shares, otherwise I’d want to buy into the long-term house building market.
I’m warming to the BT dividend too, despite the firm’s big debts. BT’s latest results make me think it’s turning the corner, and the dividend could be stable now.
So, if I didn’t already have shares in three of the sectors here, these five could easily be my next passive income buys.
