The year 2021 was a good one for FTSE 100 dividends. Almost across the board, we saw an increase in payouts. This year might be equally good, if not better, as the recovery strengthens. But I do believe it would be a mistake to think that the stocks that earned me solid passive income last year will be the ones to do so this year as well. Considering the mining group, for instance. The set has had some of the highest dividend yields in the past year, but with a cooling off in metal prices, their dividends are set to fall. Similarly, real estate stocks might slow down as well. But there are still some FTSE 100 stocks that could do quite well. Here are five such.
#1. Glencore: FTSE 100 mining outperformer
Ironically, the stock expected to increase its dividends the most this year is also a miner, Glencore, as per AJ Bell research. In fact the increase in the dividend amount is expected to be more than two times that of the next biggest. I actually held the stock till recently, but sold it because I believe it was overvalued and its dividends so far at least were nothing great. If it does increase it dividends now, who knows, I might just be willing to give it another go.
#2. Royal Dutch Shell: oil price bonanza
The FTSE 100 oil biggie Royal Dutch Shell is expected to post the next biggest increase this year. No points for guessing why. Oil companies are expected to see a big bonanza on account of high oil prices, as demand stays elevated while the recovery ensues. We have already seen an upturn in oil companies’ financial fortunes in the past year and there could be more in store. BP’s dividends are also expected to rise, but the company is not on the list of the biggest five dividend increasing stocks this year. I own both stocks, and am planning to load up more on them. That is only in so far as growth does continue, though. With super-high inflation, who knows what happens next?
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#3 & #4. HSBC and Lloyds Bank: interest rate hikes
The two banking stocks, HSBC and Lloyds Bank are number three and four on the list. Banking stocks’ dividends have been withheld recently because of regulatory requirements and possibly even a weak recovery. However with interest rates expected to rise significantly over the course of 2022, banks could see an increase in margins. This in turn could increase their dividends to pre-pandemic levels. Both stocks are on my buy-list for this year.
#5. Flutter Entertainment: starting out on dividends
Next, is the FTSE 100 sports betting and gaming company Flutter Entertainment. It does not pay a dividend at present, but clearly it intends to now. The stock did quite well in the months immediately following the first lockdown, but its share price has subsided since. In fact, it has lost ground over the past year. Even earlier, I was not keen on it from an ethical standpoint. And considering that it will just start paying dividends, I doubt if its yields would be particularly noteworthy. I will continue to avoid it.
