Dividend income accounts for a sizeable proportion of the total returns available from the stock market. Don’t miss out on the extra income which can boost your spending power.
We’ve created a portfolio of stocks which offer a dividend yield ahead of the FTSE 100 – our ten companies currently yield more than 5%.
Here’s why you’d be foolish to miss out on income boosting potential:
At the time of writing, 10-year UK government bonds offer a yield of just 1.3%. A typical best buy cash ISA savings account pays an interest rate of about 1.5%. In contrast, the FTSE 100 index has an average dividend yield of 4.6%.
The long-term performance of different asset classes also seems to suggest that equities are a better way to build wealth. According to figures compiled by Barclays, UK stocks delivered an average gain of 5.6% per year after inflation between 1966 and 2016. The equivalent figure for UK government bonds was 2.9%. For cash it was just 1.4%.
Dividend stocks also offer another great advantage – dividends tend to rise in line with company profits. Equity income growth often outpaces inflation, so income investors enjoy real pay rises.
Over long periods, the benefits of dividend growth can be significant. Perhaps the best example of this is Warren Buffett's investment in Coca-Cola (US:KO). The ‘Sage of Omaha’ bought $1bn of Coke stock in the wake of the 1987 market crash. Since then, Coke's profits and dividend have increased significantly. Some estimates suggest that Mr Buffett now enjoys an annual dividend yield of more than 60% on his original stock purchase price. That’s the power of income investing.
Our 10 stocks have returned a total of £16.3bn to shareholders since we set up the portfolio in early 2019 - that's on top of average share price growth of 4.3%. Click here to read our full analysis of all the stocks in the Income Booster Portfolio.
For as little as 25p per day you'll get access to:
Check out our market-beating 5.4% dividend yield
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