20 highest-yielding FTSE 100 shares in 2024

Banks and insurers packed the biggest dividend punch for income investors in 2024, while last year’s top-yielding FTSE 100 company has fallen down the rankings.

31st December 2024

by Graeme Evans from interactive investor

Dividend yields of 9% and above at four stocks including HSBC Holdings 

HSBA

 and Legal & General Group 

LGEN

made banking and insurance the standout sectors for investors seeking income in 2024.

Long-term savings and retirement business Phoenix Group Holdings 

finished the year with a forward yield of 10.7%, the highest in the blue-chip index.

Boosted by strong levels of cash generation, the company whose brands include Standard Life and SunLife recently outlined a new three-year strategy that featured a pledge to deliver a progressive and sustainable dividend.

Savings and investment company M&G Ordinary Shares 

 yields dividend income of 10.3% after its share price fell more than 10% and it reiterated a policy of stable or growing shareholder payments.

A tough year for Legal & General after investors gave a cool response to the distribution plans of new chief executive Antonio Simoes has left shares yielding 9.4%. 

He announced £200 million a year of share buybacks and 2% dividend growth starting from next year. Simoes said this represented an increase on the previous policy of 5% growth under predecessor Nigel Wilson, who spurned buybacks in favour of investment.

Rival Aviva 

which this year sweetened guidance so that it now expects the cash cost of the dividend to rise by mid-single digits, trades with a 7.7% yield after a stronger year for shares.

HSBC, which is the third-largest company in the FTSE 100 and the stock with the third-largest forward yield at 9%, had a target payout ratio for 2024 of 50% of earnings. It resumed quarterly dividend payments in 2023 and recently paid a special dividend from the sale of its Canada operations.

The yield of Lloyds Banking Group 

 stands at 5.6% and is the next best in the banking sector. A strong capital buffer meant its half-year dividend grew by 15% to a total of £662 million.

The top ranked in the financial sector compare with the FTSE 100 average of about 3.7%, which is down from 4% last year due to higher share prices and some year-on-year dividend setbacks such as Glencore 

GLEN

 and SSE 

The headline figure still beats November’s inflation rate and the latest average no-notice savings rate of 2.9% but is short of the UK 10-year bond yield of 4.56%.

Yields of 8% and above are regarded as a sign that the market thinks a dividend may be unsustainable, as was the case with the 11% at Vodafone Group 

VOD

 at the end of last year.

This figure has since been reduced to 6% after the mobile phone giant unveiled a new capital allocation framework, which included rebasing the total 2025 dividend to 4.5 euro cents a share.

It had paid nine euro cents on an annual basis since 2020, while in August 2018 the distribution stood at 10.23 euro cents or 9.9p a share.

The new policy was introduced by chief executive Margherita Della Valle after a wide-ranging restructuring that has led to the sale of operations in Italy and Spain and the merger of UK operations with those of Three. 

The cut will be offset by plans for share buybacks worth four billion euros, part of the 12 billion euros of proceeds from the recent disposals.

The return of cash through share buybacks can be a positive move for investors should the impact on earnings per share translate into higher future dividends.

The housebuilding, energy and mining sectors, which have been traditional hunting grounds for investors seeking income, provided only five entries in the top 20.

The highest ranked was Taylor Wimpey 

TW.

, whose dividend yield of 7.6% is underpinned by a commitment to return 7.5% of net assets annually. The shares are down 17% in 2024. The other housebuilder is Berkeley Group Holdings (The) 

BKG

One of last year’s highest-yielding mining stocks has fallen out of the top 20 after Glencore stopped paying top-up dividends in the wake of a major acquisition. That leaves Rio Tinto Registered Shares 

RIO

 as the leading pick, which has a projected yield of 6.6%.

BP 

 shares trade with a yield of 6.5%, having increased its second quarter dividend by 10% to eight US cents (6.05p) a share in September. However, the shares have fallen 19% to a two-year low as City analysts worry about the sustainability of 2025 buybacks.

Property stocks continue to trade with lofty yields as investors are paid to wait for the anticipated improvement in conditions, leaving Land Securities Group on 7%.

Urban logistics-focused LondonMetric Property 

 is not far behind at 6.6%, having joined the  FTSE 100 in the summer thanks to a decade of dividend growth.

Chief executive Andrew Jones pledged recently to be “ruthlessly efficient” in his quest to turn the company from “dividend achiever” to “dividend aristocracy”.

He added: “After all, income compounding is the eighth Wonder of the World – the secret sauce and the rocket fuel that creates wealth.”

The highest-yielding stock outside the financial sector is British American Tobacco 

, which stands at 8.1% having delivered 25 years of consecutive dividend growth. Its policy is built on distributing 65% of long-term sustainable earnings.

The yield of Imperial Brands 

 stands at 6.4% after shares rose to a five-year high in November, boosted by plans to increase shareholder returns to £2.8 billion in the 2025 financial year. This includes dividends of £1.5 billion, which will now be payable in four equal installments.

BT Group 

 has a forward yield of 5.6%, having increased the February 2025 interim award by 4%. Its full-year dividend of 5.69p a share in September was fully covered by free cash flow.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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For comparison purposes only as the Snowball only invests in Investment Trusts.