Investing in FTSE 100 shares will be a good way to make an enormous passive revenue over time.

Its big number of multinational ‘old world’ shares like banks, miners, and shopper items producers take pleasure in robust positions in established markets. This sometimes gives robust earnings development throughout the long run and sturdy stability sheets, an important mixture for these in search of constant dividends.

There are many methods traders can mine the Footsie for a second revenue. Listed below are three investments I believe savvy dividend hunters ought to take into account proper now.

Excessive yield

The primary FTSE 100 inventory to take a look at is Phoenix Group (LSE:PHNX). At 10.3%, it has the biggest ahead dividend yield on the index at present.

Whereas dividends are by no means assured, excessive yielders like this will — if dealer forecasts show correct — present an enormous stream of revenue for traders to stay off or reinvest. In the event that they select the latter, somebody can supercharge their long-term wealth-building with greater dividends because of the miracle of compounding.

Dividends aren’t assured, and threats like rising competitors or altering rules might influence future payouts. However I’m assured Phoenix’s rising market alternatives and robust money creation will proceed delivering market-beating payouts.

Its shareholder capital protection ratio was 168% as of final June, offering dividend forecasts with added metal.

Dividend grower

Profitable dividend investing isn’t all about looking giant (and life like) dividend yields, although. Profitable passive revenue chasers additionally search corporations that may develop dividends over time.

This high quality can offset the eroding influence of inflation on dividend revenue.

Security product producer Halma (LSE:HLMA) is one such firm with an excellent report of payout development. Annual money rewards have grown yearly for 45 years. However this isn’t all: at no less than 5% every year, dividends have risen at a wholesome price over the interval.

This included a 7% year-on-year hike within the final monetary 12 months (to March 2024).

The ahead dividend yield isn’t the most important, at 0.8%. However this wouldn’t put me off if I had money to speculate at present.

Phenomena like tightening security rules and efforts to deal with local weather change might result in additional spectacular revenue and dividend development. There’s additionally scope for extra earnings-boosting acquisitions, though bear in mind that extra motion on this entrance creates execution threat.

Threat reducer

A remaining method for traders to focus on dividends is by shopping for an exchange-traded fund (ETF) just like the iShares FTSE 100 ETF.

Why? A diversified product like this will, by way of publicity to scores of blue-chip corporations, minimise the influence of dividend issues at one or two corporations on total returns.

As an illustration, a diving oil price might injury earnings at BP, inflicting it to chop dividends. However the dozens of different excessive yielders the fund holds (like Lloyds, Aviva, Glencore, and Taylor Wimpey) assist to offset the influence of weak crude costs and falling payouts from oil producers.

The dividend yield on this iShares product stands at a wholesome 3.5%. On the draw back, it might fall in worth throughout a broader market downturn. However the prospect of dependable long-term dividends nonetheless make it price severe consideration in my ebook.