The FTSE 100 is crammed stuffed with shares that may give buyers a superb second revenue stream with out working for it.

That’s the magic of dividends. No sweat, no shifts, no onerous graft – simply decide the Shares and Shares ISA platform, decide the inventory, and let the enterprise do the heavy lifting. 

Ideally, I like to go away my revenue shares alone. I don’t verify their share costs each day. Compound revenue and development can work wonders, however want time.

Wealth supervisor M&G (LSE: MNG) is one among my favorite passive revenue holdings. It’s providing a whopping 9.5% dividend yield. That’s greater than double at the moment’s greatest purchase money financial savings charges. 

The distinction is that my capital is on the road, and that’s one thing buyers need to be snug with.

Money rolling in

Like nearly each different inventory, M&G was hit by the current jitters round Donald Trump’s commerce tariffs. 

With £346bn of belongings underneath administration, market shocks like this are by no means welcome. They’ll additionally postpone new purchasers from investing, denting future inflows.

As tensions ease, M&G shares are pink sizzling, up 15% in a month. They’ve now recovered from the current dip. Over 12 months, the achieve is a extra modest 6%, with that juicy dividend on prime.

Ignore the noise, and the enterprise is pushing on. On 19 March, M&G posted a loss earlier than tax of £347m, however that was principally down to truthful worth changes. 

Adjusted working revenue, which most buyers concentrate on, rose 5% to £837m. That beat expectations and was pushed by a 19% soar in asset administration earnings.

Gradual development hope

Working capital era got here in at £933m, which is necessary as that helps the dividend. The full payout was elevated, however solely by 2% to twenty.1p. My subsequent dividend ought to land in my buying and selling account this Friday (9 Could). All the time a cheerful day and clearly, I’ll routinely reinvest it to purchase extra M&G shares.

After all, there are dangers. M&G hasn’t precisely smashed it since demerging from Prudential in October 2019. As an lively fund supervisor, it faces an ongoing battle in opposition to low-cost and passive trade traded funds (ETFs).

The group is tiptoeing again into the majority annuity market, but it surely’s a comparatively small participant. There’s additionally a recent cost-saving drive underneath means, with a brand new £230m goal for 2025.

There’s strain to maintain delivering, because the yield is the principle motive many buyers are right here. Any dividend reduce could be a blow, each to revenue and the share price. Given M&G’s capital energy and money era, I’m hopeful that gained’t occur.

Loving these dividends

The 11 analysts serving up one-year share price forecasts have produced a median goal of 232p. If appropriate, that’s a modest enhance of slightly below 10% from at the moment. Mixed with that yield, this is able to give a complete return of virtually 20% if true. Naturally, forecasts can’t be relied on.

The place the price goes over only one yr is neither right here nor there to me. I plan to carry for lots longer than that. 

The M&G share price could also be on hearth at the moment, however over the long term it’s extra of a gradual burner. Which is okay by me.