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The FTSE 100 is well known for its world-beating dividend yields, but it seems to be having an all-round stormer of a year. London’s leading index is having one of its best years this century. Investors are flocking to the biggest British stocks. Why? The defensiveness of the index likely plays a part, as will those bumper dividends.
The Footsie average dividend yield outperforms what’s on offer from most other developed countries, not just at the moment, but historically too. Dividend hunters are looking at well over double in percentage terms compared to the S&P 500. So what’s at the top of the list as we enter November 2025?
Alarm bells
| Name | Sector | Dividend Yield |
| WPP | Media | 10.55% |
| Legal & General (LSE: LGEN) | Life Insurance | 8.95% |
| Phoenix Group | Life Insurance | 8.02% |
| M&G | Investment Banking and Brokerage Services | 7.66% |
| Mondi | General Industrials | 7.23% |
| Land Securities | Real Estate Investment Trusts | 6.41% |
| Londonmetric Property | Real Estate Investment Trusts | 6.40% |
A few alarm bells go off when scanning this list. In general, yields as high as 8%, 9% or even 10% are ones to keep a close eye on. They say when something sounds too good to be true then it probably is. Well, the old maxim rings true for the Footsie’s numero uno yielder.
Advertising firm WPP is struggling to compete with artificial intelligence, the share price down 67% since December. While the chunky dividend yield is enough to set hearts racing, the devil is in the details. Profit warnings, revenue drying up and weak earnings is all contributing to something of a crisis. The dividend is expected to decrease by 37% next year. That’s not to say there isn’t turnaround value here, but it’s perhaps one to avoid for dividend seekers.
Powerful effects
One entry that I don’t think can be described as a flash in the pan is Legal & General. The insurance behemoth has offered some of the largest FTSE 100 dividends for years now and could do so long into the future.
While no dividend is ever guaranteed, analysts predict the current 8.81% yield to rise to 9.22% in 2027. A rising cash return can be supported by reinvesting the payments back into more shares, creating a powerful exponential effect.
But will share price growth support the compounding effect of reinvested dividends? I wouldn’t bet the farm on it.
The share price of the London-based firm has stagnated for years now, making this quite firmly a dividend rather than a growth stock and representing an ongoing risk. The recent stock buybacks, £500m in total, may add some fuel to the fire however. I remember the complaints about the lagging Lloyds share price, but after a couple of rounds of buybacks those shares doubled in the blink of an eye!
All in all, with strong dividends, an avenue for growth and reliable revenues in a defensive sector, I’d say Legal & General is one stock for investors to consider.
