The joys of proudly owning a prime FTSE 100 passive revenue share by no means fades. In actual fact, it solely builds and builds. Particularly when it pays a crisp £458 straight into my self-invested private pension (SIPP) with no effort in anyway on my half. 

That’s precisely what occurred to me this morning, courtesy of wealth supervisor M&G (LSE: MNG).

It’s greatest identified for its fabulous yield, which now stands at a bumper 9.23% and is the principle purpose I personal it.

Loving these dividends

I purchased the inventory on three events in 2023, choosing up a grand complete of three,028 shares via my very own efforts.

Since then, M&G has executed all of the heavy lifting. Even earlier than at the moment, I acquired three dividend payouts, and reinvested each certainly one of them. That added 365 shares to my complete. 

As soon as my SIPP has robotically reinvested at the moment’s payout, it ought to add one other 210 shares at at the moment’s price of 218p. That lifts my tally to three,603 shares.

Each new share I purchase will go on to pay extra dividends, which I’ll robotically reinvest to purchase nonetheless extra inventory in what I hope might be a long-term virtuous cycle.

The important thing phrase is hope. Nothing is assured with dividends. Firms detest reducing payouts as a result of it smashes confidence, however they may in the event that they don’t have the money.

Sturdy monitor document

M&G peeled off from FTSE 100 insurer Prudential in 2019, and the revenue stream has slowly climbed since, as my desk reveals. It ignores the 2019 payout, which included a particular demerger dividend.

Progress has been gradual and bumpy, however the complete all the time climbed, if solely by a tenth of penny. The 2024 second interim of 13.5p per share funded at the moment’s £458 fee.

The gradual tempo of dividend progress has arguably capped the share price. There’s additionally a irritating quirk with high-yield shares. After they go ‘ex-dividend’ (after which anybody shopping for the shares gained’t qualify for the following dividend), the share price tends to fall roughly in keeping with the overall payout. So revenue buyers might have to simply accept slower capital progress.

Over the previous 12 months, M&G is up simply 5.8%. Over the 2 years I’ve owned it, it’s up 6.6%. However add in my reinvested dividends (together with at the moment’s), and I’m sitting on a complete return of 30%. Not dangerous in a bumpy market.

A sustainable technique

An enormous threat is whether or not the dividend is sustainable. In 2024 although, working capital technology got here in at £933m, comfortably beating its upgraded goal.

The board is now concentrating on £2.7billion in cumulative capital technology by 2027. That appears stable sufficient.

However there are challenges. Markets stay unstable. Plans to increase into European non-public belongings add complexity. And with the rise of passive investing, M&G’s conventional energetic fund mannequin is underneath stress.

There’s no manner I’m promoting although. Particularly not after at the moment. I’m sticking to my plan of holding the shares for years, and ploughing again each dividend I get. As we speak’s payout is simply one other small step in what I hope is a protracted and profitable journey.