The FTSE remains one of the richest hunting grounds for investors seeking long‑term second income.
With yields still comfortably above global comparable averages, the chance of building a dependable cash stream has rarely been greater.
M&G (LSE: MNG) remains a standout stock here, thanks to its combination of scale, stability and unusually generous payouts.
So, what sort of returns are in view?
Rising dividends forecast?
M&G has a long history of delivering market-beating dividends to shareholders. Indeed, focusing on increasing these rewards is part of its corporate strategy, executed through a progressive dividend policy.
This involves boosting the dividend in line with earnings per share growth. But if earnings fall in a year, the payout is held steady rather than reduced.
In just the past five years, this policy has seen dividends rise from 2021’s 18.3p to 2025’s 20.5p. And these generated average annual respective dividend yields of 9.2%, 10.4%, 8.9%, 10.2%, and 7.2%. By contrast, the present FTSE 100 average is 3.1% and the FTSE 250’s is 3.4%.
Of course, dividend yields can rise and fall as share prices and annual payouts alter. But analysts forecast M&G’s dividend yield will rise from the present 6.2% to 6.3% this year, 6.5% next year, and 6.7% in 2028.
How much second income?
So £20,000 worth (the same as my holding) of 6.7%-yielding M&G stock would generate £19,012 in dividends after 10 years.
The figure also factors in the payouts being reinvested in the stock to harness the full turbocharging power of dividend compounding.
After 30 years — the end of the standard investment cycle for long-term investors — the dividends would rise to a (not guaranteed) £128,434. The total value of the holding (including the £20,000 original investment) could be £148,434 by then.
And that would pay a yearly income of £9,945, just from dividends!
Can the core business sustain this?
The final piece of the puzzle is whether M&G’s underlying business can keep funding these generous dividends. And ultimately this depends on sustained growth in profit over time.
There are risks to the investment giant, as with all businesses, of course. One is a tightening of regulatory capital requirements. That could limit how much surplus capital M&G can return to shareholders in more volatile market conditions.
Another is continued rises in the cost of living, which could prompt customers to reduce account size or to close them. That would decrease the firm’s fee income.
That said, analysts project that M&G profit will grow by a whopping yearly average of 27.1% over the medium term at least.
My investment view
M&G’s combination of high yields, progressive dividend policy and strong profit growth forecasts is why I bought it in the first place. As all are still in evidence, I will buy more very shortly.
And the same factors make it one of the most appealing choices in the FTSE for long-term investors to consider, in my view.
The company’s clear commitment to maintaining and growing shareholder rewards further strengthens the investment case for my long‑term income portfolio.
Should you invest £5,000 in M&g Plc right now?
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Simon Watkins owns shares in M&G.
