Dividends can contribute massively to long-term investment returns, especially if theyre reinvested, and high-yielding shares have boosted many a portfolio. But which of the FTSE 100s stars are forecast to provide the biggest yields this year? It depends on who you ask and when, but here are the top five at the time of writing:
Direct Line
Direct Line (LSE: DLG), priced at 320p, is forecast to pay 32p per share this year, which would provide a massive yield of 10%. Thats not likely to be covered by earnings, but is part of Direct Lines strategy of returning cash to shareholders through special dividends, so we shouldnt bank on getting it very year.
But even without that, the insurers regular dividends are still expected to provide a 5.5% yield in 2016, so were looking at potentially lucrative income here.
Admiral
Second place goes to Admiral (LSE: ADM) and its predicted yield of 6.1% on shares priced at 1,503p. Thats based on Admirals policy of offering a regular yield of around 3.5% and topping it up with special dividends, and with the total for 2015 likely to be barely covered by earnings, we shouldnt expect such high yields as a given though Admiral has kept them going so far.
Taylor Wimpey
Along with the rest of the housebuilding sector, Taylor Wimpey (LSE: TW) has been soaring, and is up 275% over the past five years to 149p the FTSE 100 has managed an embarrassing 19% by comparison. But even after that growth, its also one of our best dividend payers too, with yields of 6.1% and 6.6% on the cards for the next two years. With more strong earnings growth forecast, and a P/E dropping to under nine on 2016 expectations, how can the shares not be cheap?
SSE
We need to get down to fourth place before we find a traditional safe income stock, and its energy supplier SSE (LSE: SSE) with its forecast yield of 5.9% for the year just about to end, on shares priced at 1,462p and theres 6.1% and 6.2% penciled in for the next two years. There will be some tentative fears that the dividend could be cut after Centrica did just that, but SSE is pretty certain to remain a steady long-term cash provider.
BP
And then we come to BP (LSE: BP), whose shares are still down 34% to 419p over the past five years after the big crash following the Gulf of Mexico disaster. The oil price slump hasnt helped either, and BP along with the other big players has been shelving some exploration plans and striving to cut costs.
But its dividend has come bouncing back and is set to yield 5.8% this year. That wouldnt be covered by earnings, but an EPS rise forecast for 2016 should re-establish cover satisfactorily.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.