Those that make investments for passive revenue can be to be taught that the FTSE 100, in response to those that take care of the index, at the moment (9 Might) affords a yield of three.58%. That is primarily based on quantities paid over the previous 12 months.

Quantity crunchers seem to agree that is increased than all different main international inventory market indexes, though Australia’s ASX 200 is an in depth second.

In 2025, AJ Bell reckons members of the FTSE 100 can pay £83bn in dividends. This suggests a ahead yield of three.7%. The funding platform claims that analysts are forecasting 89 Footsie shares to extend their payouts this 12 months.

That is excellent news for traders like me, preferring to purchase UK shares. In fact, dividends are by no means assured. However in my view, the index supplies some glorious passive revenue alternatives.

Returns can differ considerably

Nonetheless, the common yield hides a large disparity in shareholder returns.

For instance, some corporations — together with quite a lot of family names — fall nicely brief. Rolls-Royce Holdings is at the moment yielding 0.75%. At 0.8%, Marks and Spencer fares little higher. Nonetheless, I ought to level out that, over the previous 12 months, the share costs of those two British icons have risen 83% and 34%, respectively.

Polar Capital Know-how Belief doesn’t pay something, preferring to make use of its surplus money to purchase extra shares in different corporations.

High of the pile

On the different excessive, three financial savings and funding teams supply returns near 9%. M&G Group (9.3%), Phoenix Group Holdings (9%), and Authorized & Normal (LSE:LGEN) (9%) are the highest three on the index.

And the prospect of incomes a return of 9% a 12 months is the principal cause – however not the one one — why I not too long ago purchased shares in Authorized & Normal.

The group has established a fame as a dependable dividend payer.

It’s one among simply 19 present members of the FTSE 100 that haven’t reduce their dividend in the course of the previous decade. In money phrases, the payout declared for its 2024 monetary 12 months is 21.5% increased than it was in 2020. It’s additionally promised to extend this by 2% a 12 months from 2025 to 2027.

Extra components

However there are different the reason why I took a stake.

Due to the long-term nature of its buyer contracts, the group’s capable of estimate that it has £14.8bn of “stored value to be released into profit over the coming years”. At £13.9bn, its present inventory market valuation is 6% under this determine.

Though revenue doesn’t essentially translate into money on a pound-for-pound foundation, this does counsel the shares are undervalued.

And if the group can proceed to win new enterprise, its share price ought to do nicely. Its Institutional Retirement division is “actively pricing” £17bn of recent offers and has “visibility” on an extra £27bn.

Nonetheless, the group operates in a extremely aggressive business with its rivals providing beneficiant incentives for savers and traders to change their belongings.

And like these of us who put money into the inventory market, it will probably endure from international financial uncertainty. At 31 December 2024, the group had £201.3bn of equites on its steadiness sheet in addition to £235.6bn of debt securities.

Regardless of these challenges, I believe Authorized & Normal’s in an excellent place to develop strongly over the approaching years. And even when it doesn’t, its above-average dividend will assist compensate me for any disappointment.