The FTSE 100 has outperformed many major indices in November and will have likely helped the valuation of many UK investor’s portfolios.
While the capital appreciation will be more than welcome given the uncertain backdrop, there are still a number of FTSE 100 dividend payers that could be considered for an income as we move into 2023.
Legal & General
Legal & General pays a very attractive 7.4% dividend, even after rallying over 25% since lows in October. Legal & General was a major casualty of Kwarteng’s doomed mini-budget and felt the pressure of disruption in the bond market. At 200p, Legal & General was trading at the lowest levels since 2020 – and didn’t stay there for long.
Legal & General provided a reassuring trading update in October highlighting the impact on their business wasn’t anywhere nearly as bad as their share price suggested.
With Legal & General shares now at 255p, the stock is well below recent 310p highs and is fairly valued at 7.8x earnings.
GSK
It’s very difficult to get excited about GSK, formerly known as GlaxoSmithKline. But dividend payers shouldn’t really be that exciting. Glaxo shares have been stuck in a range for years. The stock bottoms around 1,200p-1,300p then rallies to the 1,800p region, before falling back. At 1,412p today, GSK shares are towards the bottom of this range and the 61.25p per share dividend promised for 2022 FY would mean a yield of 4.3%.
GSK is a quarterly dividend payer and tends to pay its largest dividend in the 4th quarter – which historically has had an ex-dividend date in February.
Persimmon
Persimmon is a high risk dividend play. It is likely to cut its dividend in the coming year, should the housing market slow as predicted by many experts. Last year’s dividend payouts would mean Persimmon yields 18%, but this should be ignored as Persimmon are very unlikely to pay this again in the coming year.
Nonetheless, Persimmon have been a fantastic dividend payer since the financial crisis and any weakness in the share price caused by an impending recession may be an opportunity to buy in anticipation of an economic recovery. Not for the faint of heart.