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3 I think the FTSE 100 shares can now increase dividends

Investment portfolio FTSE 100 Growth and income stocks. My growth stocks have shown healthy growth over the past year, thanks to the recovery in the stock market. But my income stock was disappointing. This is partly due to the company’s reduction in dividends during the pandemic. Another factor is that the dividend amount is less than before the pandemic.

But at least for oil and bank stocks, I’m optimistic that this could change now. Both sectors are closely linked to the economy. And the economy is showing clear signs of recovery. The UK economy showed monthly growth of 2.3% in April as the second phase of the blockade easing began. This is the fastest growth in eight months.

Oil tycoons can make a profit

The increase in economic demand is also evident in the rise in oil prices. This has been seen since the beginning of 2021.But last week, oil prices High price for the first time in 2 years..

FTSE100 Oil Company BP And Royal Dutch shell You will continue to benefit from this trend. Both have improved recent results due to higher prices. In addition, oil demand will increase further as the pandemic recedes further and travel is further eased. Either way, oil companies are in a position to make a profit.

By doing so, I think we can increase the dividend that was reduced last year.I have both stocks thanks to the generous dividends I got in the past Long-term dividend history. And now, unless the pandemic re-enforces travel restrictions or extends existing restrictions longer, we expect them to increase again.

Banks can increase dividends

Second, I hope that at some point this year, banks will be able to increase their dividends. So far, their dividends have been subject to strict regulation. When the stock market crashed last year, the Bank of England’s (BoE) Prudential Regulation Authority (PRA) called on them to refrain from paying dividends.

By the end of the year, the vaccine had been developed and the overall environment had begun to improve, allowing us to resume paying dividends. However, these are severely constrained based on the loan profile. As a result, their dividend yields have been fairly low so far. Not even one FTSE 100 bank has a yield of more than 2%.

However, this can also change. The PRA states that the current constraints are temporary. With solid signs of economic recovery, a bullish estimate of BoE’s own economic growth in 2021, and improved results across the sector, banks are free to pay higher dividends sooner rather than later.

I especially like Lloyds Bank From the perspective of passive income. It had the highest pre-pandemic dividend yield across banks. Also, as a UK-centric bank, I think it’s the best way to profit from the economic recovery. Conversely, delayed recovery or weak loan repayments can be damaging. But I think the risk is small. Think from a long-term perspective.

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Manika Premusin It owns shares in BP and Royal Dutch Shell B. MotleyFoolUK recommends Lloyds Banking Group. The views expressed about the companies in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, by exploring different insights, Better investors than us.



3 I think the FTSE 100 shares can now increase dividends

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