4 high-yield stocks that are double the FTSE 100 average

Average now FTSE 100 Dividend yield on shares is 3.57%. If I choose individual stocks with the following yields, I can also buy an index tracker that collects an income of 3.57%. It is more diverse and the risk is lower. However, I can target high-yielding stocks with above-average dividend potential. This is cleaner, but can give you a good return.

Contrasting views on property

The first two options may surprise some people. Equal Taylor Wimpey (8.40%) and Barratt’s Development (8.73%). Current results are in parentheses. Both homebuilders have seen their prices drop over the past year. This has been driven by the collapsed property market, as well as the gloomy outlook for this year.

With higher interest rates, it is more expensive for people to pay off a mortgage, or even get one in the first place to buy a property from one of the homebuilders.

Although this risk could translate into dividends per share this year, I am not worried. I will have to take some contrarian steps in order to outperform the broader market. To lock in dividend yield, buy when stock prices are low. Even if the dividend will be cut this year, I still think returns will outperform the FTSE 100 average.

And from 2024, I think the economic recovery will not only boost the property market, but the company’s profits will increase. Next, the dividend should be increased. But because I bought the stock when it was low, I should have benefited from the stock price appreciation and higher income stream.

Stocks yield high from finance

Another sector with good options is financial services. abrdn (7.36%) and Legal & General (7.42%) are two on my watch list.

In a similar way to property stocks, both companies have seen their share prices decline over the past year. This has helped increase the dividend yield to a higher level than the index average.

The main reason for the fall is the high volatility and declining financial markets over the past year. Legal & General Investors panicked again in October as the bond market experienced unprecedented movement. abrdn has billion in net outflows of funds said in the half year report.

Looking forward, I think the worst is behind us. When it comes to investors looking to return to stocks and bonds, I expect 2023 to be a very strong year for investment managers and funds. I also think we will have a smoother political landscape, which should help foreign direct investment and the unstable domestic market.

As a result, I think it is smart for me to lock in the good results offered, before the share price starts to creep higher this year. All four stocks were on my watch list for January, with the intention of buying them when I had free money.