The FTSE 100 is packed stuffed with prime dividend revenue shares. I do know, as a result of I’ve been filling my boots these days.

So I used to be to see at present’s report by Derren Nathan, head of fairness analysis at Hargreaves Lansdown. He says the UK’s blue-chip index is “fertile hunting ground for attractive and sustainable yields”, and pick his three favourites.

I maintain certainly one of them – Lloyds Banking Group (LSE: LLOY) – and I wouldn’t be with out it. The excessive avenue financial institution’s shares have soared a shocking 48.79% during the last yr. The trailing 4.44% yield has lifted my whole one-year return above 50%.

That understates its revenue potential. As Nathan factors out, it’s truly been a bit larger than that during the last decade. The forecast yield is 5.5%.

Lloyds is an excellent dividend progress inventory

He stated the cost-of-living disaster hasn’t had the anticipated impression on mortgage defaults. “There’s every reason to believe its measures of capital strength will remain above target, even if profits are down a little against some strong comparators.”

Nathan warned Lloyds might come beneath short-term pressures. Falling rates of interest might squeeze margins, plus there may be the motor finance mis-selling investigation. Like me, Nathan isn’t fazed, concluding that: “Overall, the current yield looks defensible, with scope for further dividend growth over the medium term, as well as significant share buybacks.”

Nathan additionally picks out oil and fuel large Shell (LSE: SHEL). It has attracted flak for relieving up on web zero targets however he says: “Renewed discipline in investment decisions in both fossil fuel projects and low-carbon initiatives means that shareholder payouts are likely to remain high up the priority list.”

Crucially, Shell boasts one of many stronger steadiness sheets amongst its friends which, alongside cost-cutting measures, helps a yield of 4.4%. Nathan says: “Oil price weakness threatens to put cash flow under some pressure, but there should still be enough to cover generous dividends and further buybacks, even at current prices.”

Shell shares have additionally caught my eye

I’m with Nathan and would like to pile into Shell at present. Nonetheless, I have already got a big stake in rival vitality large BP, which yields 5.59%. I’m sticking with that.

Nathan’s remaining revenue choose is British Fuel proprietor Centrica (LSE: CNA). I’ve checked out this myself on occasion. To date, I’m not satisfied. I didn’t like the way in which that it took a two-year break from paying dividends throughout to the pandemic. Most FTSE 100 corporations restored theirs at a a lot sooner lick.

Nathan says dividends are nonetheless a way beneath pre-pandemic ranges, however its 4.2% yield continues to be nicely price a search for revenue buyers. 

He says the dividend seems to be to be on stable floor. Nonetheless, he provides that buyers ought to concentrate on Centrica’s plans to speculate between £600m and £800m a yr into the vitality transition. “On one hand, that’s a growth opportunity. On the other, it’s a risk to cash-flows if returns aren’t generated as quickly as planned.”

Personally, I’m apprehensive on the pace that British Fuel is shedding prospects to rivals. This might speed up as vitality switching turns into possible once more. I feel I’ll put Centrica to 1 aspect. Nonetheless, two out of three ain’t unhealthy.