10%+ yield! Here is the M&G dividend forecast for 2026

IM&G‘s (LSE:MNG) has been one of the FTSE 100Great stocks to buy in recent times. It’s not just that dividend yields have broken the market average since 2019. Shareholder payouts have risen slightly since the company’s exit Prudential five years ago.

What makes M&G such an attractive share for me today is its double-digit yield. In 2024, only Phoenix Group it carries a big crop on Footsie today.

And as the chart below shows, City analysts expect premiums to continue rising through at least 2026, pushing the yield above 10%.

However, before buying any dividend share, I need to think about how accurate the current forecasts are. I also need to consider whether M&G’s share price will continue to sink, which could offset any major gains.

Here is my decision.

Financial basics

At first glance, those predicted gains in M&G shares seem somewhat fragile. This assessment is based on a profit cover ratio that is easy to calculate. As an investor, I want a wide margin of safety, i.e. 2 times reading and above.

Unfortunately, this year’s forecasted profits are actually higher than earnings. And although profits are said to grow in 2025 and 2026, profit cover is still weak, at 1.2 times and 1.3 times respectively.

In theory, this leaves dividend forecasts vulnerable if earnings disappoint. However, M&G has a substantial balance sheet to fall back on if profits fall short.

Its Solvency II ratio – a key signal of liquidity – was 210% as of June, double the regulatory requirement and up 7% year-on-year.

Encouraging future earnings, M&G’s also recently raised its three-year profit target, to £2.7bn from £2.5bn previously.

A strong opinion

On balance, I think there’s a good chance M&G will meet consumer share forecasts. Poor dividend coverage in recent years has been very common. However, it has not stopped the distribution of large and growing cash payments.

But does this make the business a potential buy? As I said, its share price has been falling since late March after the company received an old dividend. And it has continued to struggle since then as worries about the UK economy continue.

However, I expect M&G shares to recover significantly over time. As a leading provider of annuities and other investment products, I expect profits to rise slightly as the aging population drives demand for retirement services.

Although facing high competition, I feel that the FTSE company has the ability and brand recognition to take advantage of this opportunity.

The decision

At 196p per share, M&G shares offer that huge 10%-plus dividend yield. But that’s not all there is for value chasers to be happy about. Its price-to-earnings growth (PEG) ratio for this year is just 0.4. Any reading below 1 suggests a limited dividend, based on expected earnings.

It’s not an accident. But, on balance, I think M&G is a top dividend stock worth considering. And especially at today’s price.