The FTSE 100 is packed with top dividend stocks for a long-term second income. The index’s average dividend yield has popped higher following recent stock market volatility, and today sits at 3.3%. With a little research, investors can find companies with even better yields than this.
Take Standard Life (LSE:SDLF) as a prime example. Its dividend yield for 2026 is an enormous 8.5%. At this level, someone who invested £100,000 in this single stock in an ISA would generate a tax-free income of £8,500.
Betting all of your chips on one hand (so to speak) is a risky strategy. But if current forecasts are accurate, Standard Life could be a terrific bet for a large and growing passive income. The company’s dividend yield rises to an even-better 8.8% for 2027.
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Cash machine
A sky-high yield is sometimes a symptom of a share that’s dropped in value. But this isn’t the case with Standard Life, whose share price has actually risen 16% over the last 12 months.
The stock — which until recently traded under the name Phoenix Group — has been hiking annual dividends, resulting in those gigantic yields. Yearly payouts have risen consistently for roughly a decade, and at a healthy average growth rate of 3.2%.
So what’s its secret? The answer’s simple — the company enjoys incredible cash generation. Predictable life insurance and pension premiums, and recurring income from its fixed income portfolio, supplies a steady flow of cash it can return to shareholders.
Past performance isn’t always a reliable guide to future dividends. But I’m confident Standard Life can deliver the market-topping dividends that analysts are predicting. Its Solvency II capital ratio is 176%, sailing above the 100% regulatory requirement. And the Solvency II leverage ratio (measuring debt to capital) is 33% and trending lower, on course to hit 30% this year.
The share’s robust balance sheet also means analysts are confident of monster share buybacks before long. UBS is expecting £150m worth of these annually starting later this year.
What are the risks?
Yet as with any share, Standard Life isn’t completely without risk. After all, it operates in a highly economically sensitive industry. If conditions for consumers deteriotiate — for instance, if a prolonged Middle East war drives inflation skywards — profits and cash flows could suffer.
Even if this doesn’t impact dividends, it could push Standard Life’s share price sharply lower, wiping out the benefit of those huge dividend yields.
This is why it’s important to hold a diversified portfolio of shares, rather than just putting all of your eggs in one basket. I’m optimistic Standard Life will keep paying huge dividends in the near term, however. And I believe they’ll grow strongly over time as demographic changes drive market growth. I think this is a great FTSE share to consider for a second income.
