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With the cost of living staying stubbornly high, many Britons are looking for ways to create a second income. Whether it’s covering a sudden medical bill, a surprise car repair, or just having extra breathing room each month – an additional income stream can make all the difference.
There are plenty of options, such as taking on freelance work, setting up an online business, or renting out property. But these often demand time and effort. For those looking for a more hands-off approach, dividend stocks offer a simpler route. Once invested, the stocks do the work, paying out regular income with minimal intervention required.
I’ve identified three FTSE 100 dividend shares to consider that not only offer attractive yields but have at least five years of uninterrupted growth.
Together, they provide an average yield of nearly 7%. A £5,000 investment split evenly between them would generate about £350 in annual income today. With an extra £100 added monthly and dividends reinvested, that pot could grow to £31,380 in a decade, paying around £1,597 a year in dividends.
Aviva
Aviva (LSE: AV.) may offer the lowest yield of the three at 5.8%, but it comes with over 20 years’ uninterrupted dividend payments – a sign of reliability in an uncertain world. The insurer has consistently outperformed earnings expectations over the last four years, even when revenue has dipped. What’s more, its valuation looks good – it currently trades at a forward price-to-earnings (P/E) of 12.8 and price-to-sales (P/S) ratio of 0.48.
However, it has a slightly high payout ratio of 152%, meaning earnings don’t fully cover dividends. That’s not entirely uncommon in the insurance sector, where cash flow can outpace reported earnings. But still, a high ratio risks a dividend cut if profits dip – something to watch if markets take a turn for the worse.
Land Securities Group
With a 6.5% yield and two decades of uninterrupted dividends, Landsec‘s (LSE: LAND) another strong candidate. It’s a real estate investment trust (REIT) which owns and manages a broad property portfolio across the UK, including offices, retail and mixed-use developments. REIT’s offer a particularly attractive prospect for income investors due to regulations that ensure they pay 90% of prorits to shareholders in the form of dividends.
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The payout ratio’s a healthy 75%, leaving room for reinvestment and protection during leaner years. Analysts are optimistic, forecasting a 10% share price gain over the next year. Revenue, currently at £552m, is projected to climb to £800m by 2028. The main risk is exposure to commercial real estate, which could face pressure from rising interest rates or changing office demand.
M&G
For those chasing yield, M&G’s 8.2% payout certainly stands out. The asset manager’s built a strong dividend record since its demerger in 2019, with six years of uninterrupted payments. However, it’s currently unprofitable, meaning dividends aren’t covered by earnings – a red flag for some.
That said, it’s far from short on resources, with £4bn in premiums earned and earnings expected to jump 30% over the next three years. The risk here is simple: if profitability doesn’t improve, that high yield could prove unsustainable.
