I’m contemplating the passive revenue I may make from the highest three dividend shares on the FTSE 100 by market cap: AstraZeneca, Shell and HSBC.

AstraZeneca is the biggest firm on the listing, with a market cap of £192bn. Nevertheless, it pays the smallest yield of 1.83%. I’d want to purchase loads of the shares to earn any dividends value a point out. But it surely’s not an revenue share, is it? With a share price up 105% prior to now 5 years (equating to annualised returns of 15.5% a 12 months) it’s firmly within the progress class. On prime of the dividends, it provides up to a really meaty complete return of 17.33% per 12 months. 

Naturally, I can’t assume that sort of return will proceed but it surely’s spectacular, nonetheless.

Subsequent on the listing, Shell has a £173bn market cap and a extra enticing yield of three.88%. What has it executed over the previous 5 years, although? Nothing close to the spectacular efficiency of AstraZeneca, that’s for certain. Up solely 8.6%, its annualised returns are a moderately unhappy 1.66%. Even with the yield, mixed returns are barely above 5.5% — lower than the FTSE 100 common.

Which brings us to HSBC. A powerful dividend payer with a 6.91% yield and a strong market cap of £129bn. However the price has barely moved in 5 years, up solely 6.15%, offering annualised returns of just one.2%. Nonetheless, when together with dividends, it provides up to 7.35%.

Mixed, they supply an general common return of 10.6%. I may count on a £10k funding to develop to about £26,000 in 10 years. That’s barely above common however not spectacular – and it’s primarily based on the belief that the dividends and returns would stay constant.

A future dividend hero?

What I really need when searching for passive revenue is proof of dependable funds which might be prone to proceed rising yearly. One inventory that caught my consideration recently is Ashtead Group (LSE: AHT).

The yield is small however shareholders have loved 17 consecutive years of dividend progress, with a progress charge of 33.63% over the previous decade. What’s extra, the share price is up 182% prior to now 5 years, delivering an enormous 22.9% in annualised returns. If the price and dividends continued to develop at that charge, a £10,000 funding may attain £158,000 in solely 10 years! 

In fact, that’s an unrealistic expectation but it surely factors to 1 reality: Ashtead’s current efficiency has been distinctive.

The UK-born development rental group has expanded aggressively into the US, its largest market. But it surely’s come at a price. It now carries £6.7bn in debt, outweighing its £5.4bn of fairness. Solely throughout Covid was its debt-to-equity ratio increased. It’s taking a threat if it continues to spend at such a charge. 

The expansion additionally means its price-to-earnings (P/E) ratio of 18.8 is now increased than the trade common. That leaves little room for additional price progress. However earnings and income stay robust and future return on fairness (ROE) is forecast to be 23.7% in three years. That’s virtually double the trade common. 

So sure, the current price progress could also be unsustainable. However the firm’s dedication to rising dividends makes me wish to purchase the shares as quickly as I’ve some free capital.