How to target a 14%+ dividend yield by investing £10,000
When calculating the yearly return on a lump of cash, a dividend yield in the region of 14% or more sounds very attractive. An example stake of £10,000 would churn out £1,400 each year. And by bunging the whole thing in an ISA it would be completely tax-free too. Not bad, right?
Here’s the catch: dividend yields don’t go that high. The highest yields available on the London Stock Exchange as of March 2026 are 10%-13% and many of them don’t look stable. Time to give up on that big-earning dream then, isn’t it? Well, maybe not.
Shrewd choices
While it’s true that popular investment vehicles like index funds aren’t going to be exceptional dividend payers â a FTSE 100 dividend fund pays 2.98% at the moment â we can turbocharge our returns with individual stock picking and take advantage of a little time to let the compound interest work its magic.
Take a stock like ICG (LSE: ICG), formerly Intermediate Capital Group. The FTSE 100 company is a bona fide dividend stock, paying out regular dividends for decades on end. Yet the current dividend yield stands at just 5.14%. Not that much, right? But if we look a little closer, we can see that hardly tells the whole story.
An investor might have bought the stock in 2016 for 600p. Because of good company performance over the period, the dividend has been increased every year since, often by double-digit amounts. The amount of dividends paid this year is 83p. That’s a roughly 14% yield on the original stake â and could be a lot higher if those dividends were reinvested!
In fairness, I’m cherry-picking one of the better examples here. But I think this shows that with a little time and some shrewd choices, the idea of getting a 14% yield or higher on the money invested is not a crazy one.
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Attractive stuff
Could ICG be a good stock to buy today? I’d say it’s worth considering. The company operates as a lender for private companies, fulfilling a way for firms to get cash without going for a public listing. This is a vital service that means it can bring in a reliable income in the form of fees.
Impressively, for a firm with such a strong track record, the valuation is reasonable. A price-to-earnings ratio of around eight makes it one of the cheapest on the FTSE 100. Earnings are growing too. And the consensus share price forecast from analysts is a 56% increase over the next year.
One of the risks to bear in mind here is a flailing economy. The ICG share price cratered 40% when the pandemic hit. Further economic turbulence could have a similar effect.
As dividends are never guaranteed, then we cannot be sure of hitting a goal, be that a 14% yield or anything else. But the stock market will always have plenty of opportunities for investors to grow their cash and bring in passive income in the years ahead. I think ICG could be one of those today.
The post How to target a 14%+ dividend yield by investing £10,000 appeared first on The Motley Fool UK.
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John Fieldsend has no position in any of the shares mentioned. The Motley Fool UK has recommended London Stock Exchange Group 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.
