2018 was apprently the perfect 12 months for passive earnings traders ever, with a report complete of £85.2bn paid in dividends by FTSE 100 corporations.

In response to AJ Bell‘s Dividend Dashboard, which surveys analyst forecasts, 2025 is unlikely to beat that. But it could come close, with projections for £83bn. We also have £28.9bn in FTSE 100 buyback plans so far. That’s greater than half of 2024’s complete, and we’re solely simply previous the primary quarter.

Forecasts counsel this might lead into a brand new all-time report in 2026. Passive earnings traders may by no means have had it so good.

Examine the monitor report

Dividends are by no means assured. And a dividend reduce can usually be one of many first cures when an organization is feeling the pinch one 12 months.

So I reckon the easiest way to attempt to scale back our dangers is to search for two extra issues along with an honest yield. One is to see the mooted dividend money coated by forecast earnings. And an excellent monitor report report of constant payouts helps.

Taylor Wimpey (LSE: TW.) scores nicely on each. Forecasts counsel a 9% dividend yield with cowl of round 1.6 instances by earnings. And the corporate has stored its dividend going by means of these previous few powerful years.

Together with the remainder of the UK’s home builders, Taylor Wimpey nonetheless faces strain from excessive rates of interest and costly mortgages. However we’re already seeing lenders dropping their charges. It comes as expectations develop for deeper Financial institution of England cuts in response to US tariff protectionism.

2025 outlook

Taylor Wimpey reached the top of 2024 with internet money of £565m on the steadiness sheet, forward of expectations. That helps help the corporate’s coverage of returning 7.5% of internet belongings per 12 months as atypical dividends.

The 2024 dividend was barely in need of 2023’s, although, even with a excessive yield. Additional rate of interest strain and potential asset weak spot might be among the many threats this 12 months. And I think we may see additional share price weak spot till we’ve some critical rate of interest cuts.

However with a long-term view, if I didn’t already maintain housebuilder shares I’d be wanting some Taylor Wimpey now. In reality, I nonetheless may purchase.

Insurance coverage money

The insurance coverage enterprise might be cyclical. And very often, dividends can go just a few years with out being coated by earnings. However at Aviva (LSE: AV.) we’re a forecast 7.2% yield coated 1.2 instances by projected earnings.

Cowl isn’t up with some within the FTSE 100. Nevertheless it’s fairly respectable for the sector. I just like the look of the 9.3% anticipated from Authorized & Normal too. However its weaker anticipated cowl of 0.9 instances offers Aviva the sting for me simply now.

Aviva has stored its dividend going by means of these high-inflation years too, because it comes by means of its restructuring course of in apparently fine condition.

The ever-present cyclical danger is right here. And monetary shares typically are inclined to endure in an financial downturn, which US commerce wars may thrust upon us.

However for long-term passive earnings, I see it as one other robust one to think about.