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I London Stock Exchange it is home to many high-yielding stocks. These stocks offer great dividend yields and can provide investors with an attractive secondary income.
Here are two from FTSE 100 which I would buy today if I didn't already have them.
9.4% yield
First, I was just holding on Legal & General (LSE: LGEN). With the share price now at 226p, this means Ama-dividend's annual yield has increased by 9.4%. That is one of the highest in the UK market today.
A high yield like this can be seen as a warning sign that dividend cuts may be coming. And while this won't be out of stock, Legal & General's payout prospects look strong to me.
In H1, the insurer's core operating profit rose slightly to £849m, while interim dividends were increased by 5% to 6p a share. Its operating profit on equity increased to 35.4%, from 28.6% in H1 2023.
Another negative is that assets under management fell slightly to £1.13trn. Apart from this, asset management revenue was up 6% during the quarter.
The risk here would be a recession in the US, where the company is expanding its presence. That may lead consumers and businesses to reduce spending on financial products such as life insurance, pensions, and investment funds, all key offerings from Legal & General. That may result in lower income.
Looking to the full year, management expects operating income to grow in the mid-single digits. Meanwhile, the balance sheet remains strong and a £200m share buyback is underway.
I would invest today to aim for that 9.4% pocket-padding yield.
8.5% yield
The following is British American cigars (LSE: BATS). This is the owner of tobacco products including Lucky Strike again Rothmansas well as Velo (oral nicotine pouch), Wake up (in cigarettes), and Glo (hot tobacco).
The forward yield here is a steep 8.5%. It was up over 10% a few months ago when I invested but the share price is down about 21%, year to date.
Despite this rise, the stock is still cheap, trading at just 7.7 times forecast earnings. This probably reflects the biggest risk here, which is that the company's big tobacco business is collapsing.
Last year, for example, there were increases in tobacco consumption in Bangladesh, Brazil and Turkey, but this was more than offset by lower consumption in the US. And although it has attracted 1.4m new non-smoking consumers in the past year, it remains to be seen whether the sector will ever match the profits of cigarettes.
However, the tobacco giant still expects both full-year revenue and adjusted earnings per share to grow in the low single digits. It also plans to buy back £700m worth of shares this year and £900m next year.
Looking ahead, the company thinks it will generate £40bn in free cash flow over the next five years. That should exceed the estimated £5.1bn a year it pays out in dividends.
So, this is another FTSE 100 stock that I believe can deliver on its biggest yield.
It's a good year
If I invested £5,600 in each of these stocks, the average yield would be less than 9%. This will generate £1,000 a year in passive income.
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