I love shopping for FTSE 100 bargain shares. Stacks of brilliant blue-chip stocks remain ‘on sale’ following years of underperformance prior to 2025. This gives me a chance to make a huge passive income at very little cost.
Take Tritax Big Box (LSE:BBOX) and M&G (LSE:MNG). The average yield across these cheap FTSE shares sits at 6.3%. It means a £20,000 lump sum spread across them in a Stocks and Shares ISA could generate £2,520 in dividends just this year.
Want to know why these dividend heroes deserve serious consideration? Read on.
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Yield AND growth
At 6.9%, M&G’s forward dividend yield is more than double the FTSE 100 average of 3.1%. Not only that, but it looks far sturdier than most other dividend-paying UK blue chips.
It’s not down to dividend cover. This is just 1.1, which leaves little room for error in case earnings are blown off course by — say — rising inflationary pressures that hit consumer spending.
No, it’s M&G’s cash-rich balance sheet that fills me with confidence. Unlike many of its market rivals, its Solvency II capital ratio is actually strengthening. And at 242% at the end of 2025, it has far more money on its balance sheet than regulators require.
That’s not to say I’m expecting earnings to fall off a cliff. It’s also important to note that dividend cover has long been weak at M&G, averaging a negative 0.5 over five years. Despite this, dividends have continued growing since the company listed on the London Stock Exchange in 2019.
If I invested £20k in M&G shares today, I’d receive a £1,380 passive income in 2026 alone if City forecasts are accurate. That’s a stunning return, I’m sure you’d agree. But I wouldn’t just buy this FTSE 100 company for passive income.
I’d prefer to spread a lump sum like this across a number of shares to spread risk. But I think M&G could be a great addition to a diversified portfolio, and especially at today’s prices. It also carries a price-to-earnings growth (PEG) ratio of 0.1.
A REIT opportunity?
Adding Tritax Big Box (LSE:BBOX) shares to a Stocks and Shares ISA could also give it added steel.
The forward dividend yield here is 5.7%, still well above the FTSE 100 average. At this rate, a £20k lum sum might generate dividends of £1,140 just this year. With Tritax shares also carrying a price-to-earnings (P/E) ratio of 7.8 times, the company offers great all-round value.
As a real estate investment trust (REIT), it’s required to pay at least 90% of annual rental profits out in dividends. This has underpinned a strong history of dividend growth. Since 2014, shareholder payouts have grown every year bar one.
So what makes the REIT such a dividend hero? It benefits from a diversified portfolio of logistics and data centres, a blue-chip tenant base, and its tenants being locked into long contracts. The weighted average unexpired lease was 10.2 times at the end of 2025.
Higher interest rates could put earnings under pressure by raising borrowing costs. While this could impact Tritax’s share price, I don’t expect this to derail the FTSE firm’s brilliant dividend record.
Should you invest £5,000 in Tritax Big Box REIT Plc right now?
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Royston Wild does not hold any positions in the companies mentioned.
