Here’s how I’d earn income of 5% a year from FTSE 100 dividend stocks

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Here’s how I’d earn income of 5% a year from FTSE 100 dividend stocks The Motley Fool UK’s Top Income Stock… Enter Your Email Address With the average savings account paying around 0.06%, it’s incredible to think that loads of top FTSE 100 dividend stocks generate income of 5%, 6%, or even 7% a year.FTSE 100 dividend stocks are a fantastic source of income, which can be reinvested back into a portfolio to turbocharge returns, or used to supplement a pension after retirement.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…The pandemic has been tough on dividends, as many FTSE 100 companies scrapped or suspended theirs during the first lockdown. Some, notably the banks, were ordered to do so by the authorities. However, many have now restored their payouts, and more will follow.I’d check out these high income heroesThis year, FTSE 100 dividend stocks could yield as much as 3.5%, according to online platform AJ Bell. Many yield far more. No investor should judge a company purely by the size of its dividend, but there are some impressive shareholder payouts right now.Two FTSE 100 companies offer dividend yields of more than 7%: British American Tobacco yields 7.81% and asset manager M&G pays 7.53%. There are pros and cons to investing in these two companies, but I have recently explained why I’d buy M&G. I think both offer a terrific level of income in a low-interest rate world.I am also a fan of insurer Aviva, which yields 6.55%, and another insurer called Phoenix Group Holdings. It earns a steady living from managing ‘closed’ pension and insurance funds, and yields 6.51% a year.Another insurer, FTSE 100 dividend stock Legal & General Group, also yields more than 6%, as does oil giant BP and mobile phone specialist Vodafone Group. As with any dividends, the income isn’t guaranteed. Companies have to keep generating profits to pay them. I examine their prospects carefully before investing. I favour companies with strong balance sheets, reliable earnings, loyal customers, and a defensive ‘moat’ against competitors.I’d also consider these FTSE 100 dividend stocksMy aim is to build a balanced portfolio of around a dozen FTSE 100 dividend income stocks. That way if one or two struggle, others will hopefully compensate. I would also spread my money across different sectors, say, banking, oil, healthcare, utilities, mining, technology, and telecoms.So I might include a pharmaceutical company such as GlaxoSmithKline (which yields 5.97%), a global mining giant like Rio Tinto (5.39%), and a utility such as National Grid (5.32%). I would never buy any FTSE 100 dividend stock unless I planned to hold it for a minimum of five years. Ideally, I would aim to hold for much, much longer. This would allow me to overcome the short-term volatility that goes with investing in shares. Judging by the shares named here, achieving income of 5% a year shouldn’t be too hard. Better still, it may rise in future, as companies look to increase their dividends over time. We think that when a company’s CEO owns 12.1% of its stock, that’s usually a very good sign.But with this opportunity it could get even better.Still only 55 years old, he sees the chance for a new “Uber-style” technology.And this is not a tiny tech startup full of empty promises.This extraordinary company is already one of the largest in its industry.Last year, revenues hit a whopping £1.132 billion.The board recently announced a 10% dividend hike.And it has been a superb Motley Fool income pick for 9 years running!But even so, we believe there could still be huge upside ahead.Clearly, this company’s founder and CEO agrees. Image source: Getty Images. Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. 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. Our 6 ‘Best Buys Now’ Shares Harvey Jones | Friday, 28th May, 2021 Learn how you can grab this ‘Top Income Stock’ Report now Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. I’d also check out this opportunity. See all posts by Harvey Joneslast_img

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