3 FTSE 100 shares paying very high yields

As a veteran investor, my investment strategy is built on three simple principles. The first is diversification: spreading my money across multiple markets. The second is capital: investing in the future growth of share prices. And the third is high yield: invest in stocks that pay cash dividends.

I like high yields

Like many older investors, my wife and I use dividend-paying stocks to generate income for our family portfolio. Indeed, almost all of our passive income comes from stock dividends.

But shared dividends are not guaranteed – and can be cut or canceled at any time. In good years, dividends often increase, but can decrease during bad years. For me, dividends are one of the riskiest forms of income – but easily my favorite.

In addition, not all UK listed companies pay cash dividends to their shareholders. In fact, the majority of stocks in London do not. Fortunately, most companies are blue-chip FTSE 100 the index pays dividends, so I hunt for high yields.

Three FTSE 100 dividend dynamos

For example, here are three Footsie companies whose shares gave some of the highest returns on the London market:

For the record, my family portfolio already includes one of these stocks, as purchased The Vodafone Group share price from 90.2p in December. Vodafone shares are down almost 30% in the past 12 months – and this fall has landed them on the watch list of bin stocks.

Vodafone’s share price has risen around 10% since the purchase, giving it a modest capital gain on paper. However, this price increase also lowered the company’s bumper dividend yield to 7.8% annually. And although it has been a tough few years for the group, I expect the next rise in consumer prices to help support these cash payments.

I will buy another high yield today

As I said before, my portfolio strategy relies heavily on dividends for income, to spend or reinvest into other stocks. And that’s why I would love to buy the two high yielding stocks in the table above, but I won’t now.

As one of the world’s leading cigarette manufacturers, British American Tobacco it is what some people call a ‘sin stock’. And ESG (environmental, social, and governance) investors tend to avoid these stocks.

But as a smoker myself, I don’t see a problem in the benefits of my own dirty habit. And I insist on BAT which is 7% cash yield, guaranteed 1.3 times by earnings. However, I will not buy BAT shares, because my husband does not agree. And I strongly subscribe to the saying, “Happy wife, happy life”!

The third and final high earner is the investment manager M&G, which shares pay bumper 9.2% year in cash. Although dividend payments are not covered by historical earnings, M&G intends to maintain its current dividend strategy. Therefore, I have added M&G to my watch list of potential stocks to buy when the new tax year starts on April 6th. Watch this space…