10% dividend yield! Here’s a FTSE 100 share to consider in April for passive income

Income traders are at all times on the attention out for high-yielding dividend shares, notably these on the FTSE 100. These blue-chip shares sometimes have a stable stability sheet and excessive money movement, making dividends extra dependable. So when a new inventory took prime spot for yields on the index, I had to test it out.

A giant yield

World funding supervisor M&G (LSE: MNG) just lately moved above Phoenix Group to safe its spot because the highest-yielding inventory on the Footsie. In late March, Phoenix fell under 10% for the primary time in a month as its share worth rose sharply.

Now, M&G’s skilled the alternative — a sudden worth dip that despatched its yield hovering. It additionally just lately introduced its ultimate 12 months dividend, up 2% from final 12 months. Collectively, these elements sometimes make for a compelling funding case: a low worth and excessive yield.

However there could also be extra to the story.

A dividend newcomer

The issue with dividends is that they’re by no means assured and may be minimize or decreased at any time. Presently, M&G appears enticing as a result of its paying 20.1p on every £1.99 share. However dumping that a lot money on shareholders yearly comes at a excessive value — and when cash will get tight, dividends can get minimize.

That’s why it’s important to test a firm’s monitor document when purchasing for dividend shares. Corporations that adhere to a strict dividend coverage sometimes have not less than 10 years of stable progress with no cuts.

Being a comparatively new firm, M&G solely has a six-year historical past of dividend progress. I wouldn’t write if off fully — each prime dividend payer has to begin someplace — nevertheless it makes it tougher to belief.

So let’s see if it could possibly keep that progress.

Threat and figures

A key concern M&G is going through recently is buyer outflows, which amounted to £1.9bn in the newest 2024 outcomes. That’s in stark distinction to the inflows of £1.7bn loved the 12 months earlier than.

This will partly be as a result of lots of its pension fund shoppers are rebalancing capital from shares into bulk buy annuities (BPAs). This development is pushed by stubbornly excessive inflation amid an enhancing economic system. If M&G can’t acquire extra publicity to this market, it could endure additional outflows.

But it nonetheless managed to report a 5% enhance in working revenue in 2024 and reiterated its dedication to shareholder returns. It additionally elevated steering for 2025, elevating its cumulative financial savings goal by 15% from £200m to £230m.

With that form of confidence, I’d count on higher analyst scores, however the common 12-month worth goal is simply 233p — a 16.7% rise. Nonetheless, JP Morgan put in an Obese score on the inventory final week with a worth goal of 275p. That might equate to nearly a 50% capital acquire when including in dividends. Not a dangerous return!

So regardless of the dangers, I believe M&G’s a inventory price contemplating for passive income in 2025. A yield above 10% is a uncommon discover on the FTSE 100, notably when backed by a firm with promising progress potential.