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The FTSE 100 at present presents up a 3.6% dividend yield. However as a eager revenue investor, I’m not content material with this. I’m on the hunt for UK blue-chip dividend shares with higher yields.
There are a lot for me to select from too. And critically, loads of these look in good condition to supply a sustainable and rising dividend over time.
Right here I’ll clarify why I’m looking for dividend shares to purchase, and reveal one I’m eager so as to add to my portfolio. It’s grown shareholder payouts yearly because the Nineteen Sixties!
The knowledge of dividend investing
Why is dividend investing so vital? For one, it may be vital for individuals who must fund their on a regular basis bills, corresponding to retirees, who want an everyday revenue so as to add to their State Pension.
I’m not at this stage but. However the the explanation why I’m concentrating on income-paying shares can be extraordinarily vital.
I’m seeking to obtain dividends in order that I can reinvest them to exponentially develop my wealth. This course of — often called compounding — is actually a method of incomes cash on cash that I’ve already made.
When my dividends are used to buy extra shares, these new shares I personal may present dividends, which I additionally then make investments. This ongoing cycle over the long run can ship life-changing returns. Albert Einstein is alleged to have known as compounding “the eighth surprise of the world” for good motive.
It’s additionally value remembering that dividend-paying shares have traditionally outperformed non-dividend-paying shares over the long run. Earnings shares are usually much less unstable by the financial cycle, whereas they’ll additionally expertise wholesome share value appreciation over time.
A Dividend Aristocrat
Metropolis of London Funding Belief (LSE:CTY) is a prime dividend-paying inventory I’m eager on shopping for quickly. This passive revenue hero has raised shareholder payouts yearly since 1966!
The belief concentrates on investing in steady Footsie shares. In the present day its largest holdings embody BAE Programs, Shell, HSBC, and Unilever.
This makes it excellent for delivering steady revenue to shareholders. Many of the shares it owns have market-leading positions, a number of income streams, and sturdy stability sheets. So that they have the potential to ship sturdy capital appreciation in addition to wholesome dividends.
Certainly, many of those FTSE 100 shares are dividend heroes in their very own proper. BAE Programs — during which the belief has 4% of its capital invested — hasn’t reduce its dividend for greater than 30 years.
Proud document to proceed
On prime of this, the FTSE 250 belief’s diversification throughout many blue-chip shares means it will possibly proceed paying massive and rising dividends even when one or two of its holdings come underneath stress.
Brokers count on Metropolis of London to lift the annual dividend for the 58th consecutive time in 2024. And so the dividend right here sits at a market-beating 4.8%.
On the draw back, the belief’s share value may come underneath stress if the FTSE 100 falls in worth. However as we’ve already seen, I nonetheless suppose it’s a good way to focus on a long-term passive revenue.
