I personal fairly just a few FTSE 100 shares with juicy yields. British American Tobacco, Authorized & Normal, and M&G (LSE: MNG) all provide a dividend yield greater than 8% proper now, for instance.

However that’s greater than double the present common for shares within the flagship blue-chip index of British shares.

So, ought I to tack to the typical – or discover shares that provide an distinctive yield?

Dividends – and the remaining

In fact, the prospect of incomes £8 or extra annually for each £100 I make investments right this moment is engaging.

Not solely do these three shares every yield above 8%, however none has minimize its dividend lately.

With regards to price motion, although, issues look much less rosy.

Over the previous 5 years, the FTSE 100 index has moved up 11%. The British American share price has climbed by beneath 1% throughout that interval. Authorized and Normal and M&G are down by 21% and 12%. Ouch (although, thanks for the dividends alongside the way in which)!

Restricted progress alternatives?

In a single sense, that is likely to be unsurprising. Mature corporations typically pay beneficiant dividends within the absence of progress alternatives on which to spend their spare money.

However whereas I feel that could be a fairish description of British American, each Authorized & Normal and M&G function in an business with merely monumental demand that I feel could continue to grow over time.

So, what ought to I do?

The ability of compounding

Maybe the reply is “nothing”.

Just by hanging onto my shares – and reinvesting the dividends – I hope I might doubtlessly do very properly financially.

With a mean FTSE 100 yield of three.6% proper now, if I compounded £10,000 at that stage for 20 years, I might finish up with a portfolio valued at greater than twice that quantity.

Not unhealthy. However what if I compounded my £10k at 10%, the present M&G yield? After the identical time frame, my shareholding must be price over £67,000.

Making sensible selections

In follow, how issues will end up in future is unknown.

Sure, M&G advantages from working in a market with giant, resilient demand. Sure, its robust model helps it faucet into that demand. Sure, its experience in asset administration helps the agency set itself other than upstarts.

However what if weak efficiency by its asset managers results in shoppers withdrawing funds? We’ve seen such outflows from M&G typically and in the long run, they’re a threat to profitability.

Nonetheless, I’m glad to personal M&G shares as a part of a diversified portfolio. By doing that, I purpose not simply to beat however to smash the typical FTSE 100 yield.

Does that matter? If it means I can transfer in the direction of my monetary targets sooner, then I feel the reply is a powerful “sure“!