Lloyds shares have been a great income play in recent years as the bank has paid out some massive cash amounts to investors after resuming its dividend in FY2014. Even after the near-30% share price rise this year, Lloyds shares still yield around 5.2%, which is a pretty handy yield in today’s low-interest-rate environment.
Yet Lloyds certainly isn’t the only the FTSE 100 stock offering a big dividend yield at the moment. In fact, according to Stockopedia, there are nearly 30 Footsie stocks that currently sport higher yields than Lloyds. With that in mind, here’s a look at three high-yielding FTSE 100 dividend stocks I like the look of right now.
Tobacco manufacturer Imperial Brands (LSE: IMB) remains one of my preferred FTSE 100 high-yield plays. That’s because the company has a phenomenal track record of lifting its dividend, having registered 10 consecutive 10% increases now. Moreover, with tobacco stocks out of favour at present, you can currently pick the stock up with a massive forward-looking yield of 8.2%.
Of course, tobacco stocks aren’t for everyone due to the nature of the business. There are also a number of risks to the investment case including increasing regulatory interference and declining smoking rates. Yet demand for cigarettes isn’t going to go away entirely any time soon, so I think IMB will be able to continue paying out big dividends in the near term. It’s worth noting that Citi just slapped a £30 price target on Imperial, which implies 20% share price upside.
Insurance group Aviva (LSE: AV) is another FTSE stock that offers a stunning yield right now. Like Imperial, it has lifted its dividend payout significant in recent years (there’s a nice snapshot of Aviva’s recent dividends here) and it’s expected to pay out 32.4p per share in dividends for FY2019 which equates to a prospective yield of 7.5%.
Aviva shares are also a little out of favour right now. One reason for this is that insurance is cyclical (meaning companies perform well during the good times and struggle during downturns) so with investors still a little on edge in relation to global growth prospects, many are cautious of Aviva. Yet it’s worth noting that the company did just hike its dividend by 9%, which suggests that management is confident about the future. With the stock trading on a P/E of 7, I think the risk/reward ratio here is favourable.
Finally, advertising group WPP (LSE: WPP) is another dividend stock that looks interesting right now, in my view. The company is expected to pay out 60p per share in dividends for FY2019, meaning the prospective yield here is currently 6.4%.
WPP has had a tough time in recent years as ad spending has fallen and the industry has evolved. Influencer-leader Martin Sorrell also left the company. Yet the group is taking steps to turn things around by selling off assets and streamlining the business, and so far, the strategy appears to be working.
At the current P/E of just over nine, WPP shares appear to offer a margin of safety. Indeed, analysts at Deutsche Bank – who recently upgraded the stock to ‘buy’ – believe the stock has “limited downside risk” at current levels as it looks “too cheap.” With that in mind, I think WPP is worth a closer look if you’re looking for high yield.
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Edward Sheldon owns shares in Lloyds Banking Group, Imperial Brands, Aviva and WPP. The Motley Fool UK has recommended Imperial Brands and Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2019