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Analysts expect £83.6bn in dividends from FTSE 100 in 2025, according to AJ Bellan increase of 6.5% compared to last year. This translates into a forecast future dividend yield of 3.9%.
Of course, this is a snapshot of the entire index. Some individual stocks offer much more, including M&G (LSE: MNG) and Phoenix Groupboth with yields greater than 10%!
Here, I'll look at three FTSE 100 financial stocks that could earn dividends in my investment account.
10%+ performance
For starters, I can't ignore M&G. Shares of the investment and wealth management company are currently offering a surprising 10.4% yield.
Better still, City analysts predict the payout will rise another 3% this year, to 20.7 pence per share. If it materializes (taking into account that dividends are not guaranteed), it would place the forward profitability at 10.8%.
In other words, investors could expect to receive almost 21p for every share they buy at the current price of 190p. Just writing that makes me want to close the laptop and grab my phone to buy some stocks!
However, if we move forward, there are risks to be aware of. As an asset manager, M&G is exposed to the vagaries of the financial markets, while competition is tough. Furthermore, the rise of passive investing continues to pose long-term challenges to the asset management industry, at least for active managers.
However, the bearish sentiment towards many FTSE 100 financial stocks seems overblown to me. M&G will publish its results for last year in March. If there's nothing to be alarmed about in the report, I can add some stocks to my portfolio to target out-of-this-world income.
8% performance
The next one is Aviva (LSE: AV.). The company is already an insurance giant in the UK, but is set to grow even more after reaching a deal to buy its rival. Direct Line for 3.7 billion pounds. If approved, this would significantly strengthen Aviva's position in the motor insurance sector.
Of course, it would also add risk, since major acquisitions like this don't always work out. The share price has not risen anywhere since the announcement, suggesting investors are lukewarm.
However, looking ahead, Aviva is expected to increase its dividend by 7% to 38 pence per share this year. This translates into an attractive dividend yield of 8%.
Meanwhile, the stock looks cheap and is trading at a price-earnings multiple of 9.8. I'm happy to continue holding my Aviva shares for now.
6.6%
Finally, there is HSBC (LSE: HSBA). The Asia-focused bank has enjoyed a strong rally and its shares are now trading at a multi-year high of 790p. However, the expected return for 2025 remains 6.6%, well above the FTSE 100 average.
Meanwhile, the company has been buying back a large amount of its shares. In October, it announced a new buyback of $3 billion, after the last one worth $3 billion. In fact, at the end of September it had already paid out $18.4 billion in dividends and buybacks for the year. So the bank is in a good situation right now.
That said, HSBC makes most of its profits in Asia. If these markets, particularly China, were to suffer during a new trade war under Donald Trump, that could cause earnings volatility.
However, with the stock still trading cheaply and offering a 6.6% yield, I like the risk/reward setup here.
