Inventory market volatility is all the time unsettling however it will also be an excellent alternative to focus on an excellent increased second earnings from FTSE 100 dividend shares. 

Falling share costs routinely drive up dividend yields, providing long-term traders the prospect to lock into higher returns.

There are dangers although. In the present day’s sell-off has been pushed by Donald Trump’s commerce tariffs, which threaten firm earnings and endanger their dividends. 

However for far-sighted traders who perceive and settle for the dangers, the confusion may simply open the door to an elevated passive earnings stream.

Shares fall, yields rise

One inventory that has weathered current market turbulence is life insurer Phoenix Group Holdings (LSE: PHNX). It has now risen about 22% over the previous 12 months.

In the present day, it provides one of many highest dividend yields on the FTSE 100 at a shocking 9.2% on a trailing foundation. It is a substantial earnings stream, roughly double what will be achieved on even the most effective financial savings charges.

As soon as share price development is included, the whole return is round greater than 30%. Nevertheless, it’s necessary to keep in mind that capital is in danger with shares. Revenue isn’t assured both.

As a UK-focused entity, its core insurance coverage and retirement companies are largely insulated from commerce disputes. But there may very well be knock-on results.

Phoenix manages round £280bn of belongings to guard towards insurance coverage dangers, and market falls will dent their complete worth.

On the plus facet, with rates of interest more likely to fall, many traders are turning again to UK dividend shares, tempted by excessive yields and engaging valuations.

The Phoenix share price additionally rises

2024 monetary outcomes have been encouraging. Phoenix generated £1.4bn of working money, a 22% rise, hitting its 2026 goal two years early. 

Administration lifted its three-year money technology goal to £5.1bn, up from £4.4bn. Adjusted working earnings rose 31% to £825m, with stronger contributions from pensions, financial savings and retirement options.

The board is dedicated to delivering a sustainable passive earnings stream. Nevertheless, I don’t anticipate massive annual will increase. The 2024 dividend was elevated by a modest 2.6%, for instance. Given the sky-high yield, it’s laborious to complain.

Any suggestion that the dividend is underneath risk can be an enormous blow, and will additionally hit the share price as that is the primary purpose traders purchase the inventory. However I nonetheless assume this one is price contemplating.

The FTSE 100 has loads of shares like these

Inventory market volatility will be unnerving, however it additionally supplies moments when long-term traders can discover uncommon alternatives price contemplating like this one.

Phoenix Group is only one instance, I might title lots extra high FTSE 100 dividend shares that look extra engaging at the moment, offered traders take a long-term view.

No one has any concept what Trump will do to inventory markets over the months forward, so traders should be each courageous and affected person.

Persistence is all the time required with dividend shares, which don’t make individuals wealthy in a single day. As an alternative, the advantages compound over time, with reinvested dividends shopping for extra inventory, which pay extra dividends, in a virtuous circle.

Nonetheless, for traders ready to journey out short-term storms, at the moment’s worries might finish up being remembered as an excellent time to lock in a rising second earnings. Time will inform.