These 3 FTSE 100 firms are dividend dynamos!

As a veteran investor with 37 years of experience, I have become a fan of dividend investing. But because cash dividends are not guaranteed, they can be cut or canceled at any time. In addition, almost all dividends paid by UK stocks come from a strong selection group FTSE 100 sharing.

FTSE 100 shares pay huge dividends

According to one recent report on UK dividends, FTSE 100 companies will pay £85.8bn in dividends to shareholders this year.

However, one of the problems with this cash torrent is that it is created by a select few mega-cap companies. Indeed, more than half (54%) of Footsie’s dividends in 2023 will come from just 10 members. That seems pretty concentrated to me.

Three Footsie dividend winners

For the record, analysts expect this trio of FTSE 100 members to pay the three largest cash dividends by size this year:

Cash payouts for 2023 for these three dividend Goliaths range from almost £5.6bn at the mega-miner Rio Tinto to nearly £6bn in the oil supermajor shell.

Together, these three mega-cap companies accounted for almost £17.3bn of expected dividends from the FTSE 100 this year. That’s 20.1% of Footsie’s total cash return. wow

My desk also neatly shows how the largest London-listed companies are sometimes forced to cut dividends. For example, Rio Tinto cut its dividend when it was in the 2016 global commodity market.

Moreover, during the 2020 pandemic panic, even the mighty Shell was forced to cut its dividend. and Glencore Cut your own pay four times between 2013 and 2020. In short, even the FTSE 100 super-heavyweights can’t guarantee future cash payments.

The dividend is well covered

When deciding which stocks to buy for cash, I always look beyond the headline dividend yield. I also check how well this regular payment is guaranteed. And if the end of the company’s earnings do not comfortably cover the dividend yield, this gets a black mark from me.

Fortunately, the dividend cover on these three companies looks good to me. It ranges from rock-solid five times in Shell to over 2.3 in Glencore to a more modest 1.5 times in Rio Tinto.

I would like to buy three stocks today

For the record, my husband already owns Rio Tinto shares, which he bought for the family portfolio at the end of June last year. Rio shares have lost ground again, down 10.6% over the past month. But we would definitely hold onto this FTSE 100 stock for its future cash dividends and potential capital gains.

Furthermore, I would like to buy shares in Glencore and Shell at current price levels. And although I worry about red-hot inflation, sky-high energy bills, rising interest rates, and the risk of a prolonged UK recession. But I have to wait until the new tax year starts on April 6th!