When I am looking for the best shares to buy for dividend income from my portfolio, I like to concentrate on FTSE 100 stocks.
There is a reason why I look to blue-chip equities over other sections of the market. I believe most large-cap companies have stronger balance sheets and more sustainable competitive advantages than their small peers.
The best shares to buy for income
These are essential qualities when searching for income investments. Companies with strong balance sheets and sustainable competitive advantages should be able to return more cash to their investors in the long run.
Of course, this is not always correct. Just because a company is trading in the FTSE 100 does not necessarily mean investors should take its dividend for granted. Indeed, there are any number of reasons why a corporation could cut its dividend payout. Higher interest rates, rising costs, or a sudden decline in corporate profitability, could force a business to reduce its payout.
Still, I believe the FTSE 100 is a great starting point to look for potential dividend ideas. And with that in mind, here are my best shares to buy for dividend income in the FTSE 100 today. I would add all of these companies to my portfolio today.
FTSE 100 stocks
The first enterprise on my list is the pharmaceutical giant AstraZeneca. Made famous for its coronavirus vaccine, the company’s related business is just a small part of the overall enterprise. The group’s cancer and oncology business is far more important, in my eyes. This is set to be a major growth engine for the firm.
Considering its position in the relatively defensive healthcare industry, I think Astra is a fantastic income investment. At the time of writing, the stock supports a dividend yield of 2.6%. The distribution is covered 2.3 times by earnings per share, leaving headroom for expansion in the years ahead.
Another of the best shares to buy in the FTSE 100 today for dividend income, in my opinion, is homebuilder Persimmon. With a dividend yield of 9.6%, at the time of writing, and a debt-free, cash-rich balance sheet it looks to me as if this payout is here to stay. The company has more than £1.3bn of cash on its balance sheet, which should provide more than enough headroom to both maintain the dividend and invest in growth.
Growth potential
A final company that really stands out to me as one of the best shares to buy now for income in the FTSE 100 is Airtel Africa. The telecommunications and mobile money services enterprise operates an expanding business across Africa.
The stock currently offers a dividend yield of 3%, and the payout is covered 2.5 times by earnings per share.
It is also investing heavily to expand its footprint, which should help drive earnings growth in the years ahead. I believe this could translate into further dividend growth.
All of these companies exhibit the qualities I am looking for in the best shares to buy now for dividend income. With their strong balance sheets and growth potential, I think these businesses have the potential to increase their distributions in the years ahead.
Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Airtel Africa Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
This post was originally published on Motley Fool
