If I had to pick 10 Footsie dividend shares with which to start a new ISA today, what would I go for?
Well, the latest Dividend Dashboard from AJ Bell suggests 2023 could be a great year for FTSE 100 dividend investors.
Back to growth
Last year should be down a bit. But we should see rises this year, and in 2024. FTSE 100 firms could be on for a total payout of £84.8bn this year.
I wouldn’t mind a bit of that. And I think these 10 stocks might be a good way to get some:
| Stock | Recent price | Share price, 1 year |
Share price, 5 years |
P/E, 2023 | P/E, 2024 | Dividend yield, 2023 |
Dividend yield, 2024 |
| M&G | 201p | -4.2% | -11% | 12 | 10 | 9.6% | 10% |
| Glencore | 433p | -9.1% | +12% | 6.9 | 7.0 | 9.2% | 9.0% |
| Legal & General | 230p | -5.1% | -18% | 7.0 | 6.1 | 8.6% | 9.1% |
| Taylor Wimpey | 125p | +1.4% | -36% | 14 | 12 | 7.6% | 7.6% |
| Persimmon | 1,312p | -37% | -53% | 15 | 12 | 4.9% | 5.2% |
| Lloyds Banking Group | 45p | +6.3% | -32% | 6.2 | 6.0 | 5.5% | 6.1% |
| Barclays | 155p | +5.0% | -28% | 4.7 | 4.5 | 5.2% | 6.1% |
| British American Tobacco | 2,710p | -19% | -30% | 7.5 | 7.0 | 8.4% | 9.0% |
| National Grid | 1,160p | -3.1% | +37% | 17 | 16 | 4.6% | 4.9% |
| Unilever | 4,350p | +18% | +4.7% | 21 | 19 | 3.4% | 3.6% |
Price-to-earnings (P/E) ratios and yields are all forecasts. And they should be treated with caution, especially for 2024.
The M&G five-year share price performance is actually down 11% since its demerger from Prudential in October 2019.
Hard choices
It was hard to decide between Taylor Wimpey and Persimmon. The former wins it on dividend yield. But forecasts have the dividend flat for the next few years.
They show growth at Persimmon though. Some sources still think we might see a special dividend too, and my table only shows ordinary dividends. I think I’d be happy to hold both.
Cheap banks
The choice between Lloyds and Barclays is also a tough one. Both look very cheap to me, with dividends well covered by earnings. The banks face real risks this year, so I should be wary. And I really should aim for diversification.
But with those super-low P/E multiples, I would seriously consider buying both here too.
Diversification?
Talking of diversification, I think my other picks give me a reasonable amount. And I think I also have a few relatively safe ones there, like Unilever and National Grid.
I almost went for Shell after its bumper profits this year and very big dividend cover. But then I remembered that wind has just become the biggest electricity source in the UK in the first quarter of this year.
National Grid carries power however it’s generated, so that’s my energy choice.
Unbalanced set
This set of dividend shares is biased towards the finance sector, so it’s not well balanced. And that does bring added risk. But forecasts suggest that financials could see some of the biggest earnings growth this year.
These are stocks that fit my strategy and risk outlook, and I’ve mostly bought financial shares over the years. So they won’t suit everyone, and individual investors need to make their own choices.
