£ 1,000 to invest? 2 FTSE 100 shares with BIG dividends to buy now
I’m looking for the best dividend FTSE 100 shares to buy now. Here are some big producers that I think might be too good for me to miss.
ESS (LSE: SSE) is a stock that I sold several years ago. But after a recent overhaul, this is an FTSE 100 dividend stock that I am thinking of buying again. Selling its retail business to Ovo in 2019 removed a huge thorn in the side of the energy giant. Its customer base here was collapsing as the number of cheaper, promotion-oriented vendors in the market skyrocketed.
SSE’s other groundbreaking initiative saw it commit to supercharging the amount of energy it produces from renewable sources. The company owns and operates hydropower plants and wind farms in the UK and plans to triple the amount of electricity it will produce from green sources by 2030. It has several gigantic projects in its bag, such as the Dogger Bank wind farm, which will eventually power 6 million homes.
Such ambitious plans naturally leave a big bill. And SSE has already had to cut dividends a bit to enable it to achieve its growth plans. After 25 consecutive years of annual dividend increases, it rebased the dividend for fiscal 2020 to pay for its migration to green energy. It’s not entirely inconceivable that shareholder payments could suffer again as the portfolio overhaul progresses.
It’s not something the city’s brokers are expecting, at least not any time soon. Indeed, they predict that dividends will continue to rise after the first increase last year following rebasing. As a result, SSE is showing strong returns of 5.3% and 5.5% for the years ending March 2022 and 2023, respectively.
9.3% dividend yield
Admiral GroupAnother brilliant income title that I’m watching closely is (LSE: ADM). Like SSE, it operates in a very stable industry (in this case general insurance), a quality that allows cash flow and earnings to remain stable regardless of broader economic conditions. It gives him confidence and the weight to pay big dividends, whatever the weather.
Well I say whatever the weather. Of course, extreme weather conditions resulting from climate change pose the threat of extreme and unpredictable cost increases at Admiral. This has the potential to drastically reduce the profits and therefore the dividends of these companies.
There are still a lot of reasons why I would buy this Footsie stock. Its formidable branding power gives it the edge in an ultra-competitive industry, for example. I also like the steps he is taking to embrace international markets to reduce reliance on the UK and drive profit growth. The number of foreign clients on its books jumped 14% between January and June, to 1.71 million.
The particularly huge special dividend payout this year creates a monster 9.3% dividend yield for 2020. City analysts expect Admiral yields to remain high next year as well, at a delicious 6. %. Like SSE, this is a stock of the FTSE 100 that is expected to pay huge dividends for years to come.
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Royston Wild has no position in any of the stocks mentioned. The Motley Fool UK recommended Admiral Group. The opinions expressed on the companies mentioned in this article are those of the author and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that considering a wide range of ideas makes us better investors.