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The most laid-back investor won’t have failed to notice that the FTSE 100 is doing very well in 2025. Even certain dividend stocks — those primarily bought for the passive income they throw off — have made great gains.
Today, I’m looking at two examples, both of whose share prices now sit at (or very near) 52-week highs.
Smokin’ hot
Anyone buying British American Tobacco (LSE: BATS) stock at the beginning of 2025 is entitled to feel rather smug. The share price has now climbed 43% this year — roughly four times the return of the index. Factor in the 60p a share dividends received in May and August and the result is even better.
This momentum has been justified by the company’s latest set of results.
In addition to beating analysts expectations on profit in the first-half of the year, the company said that business in the US had grown for the first time in three years. That’s important considering this company makes nearly 50% of sales across the pond.
More to come?
Of course, there’s no way of knowing where share prices are going next. This is why we prefer to focus on the long term here at the Motley Fool UK.
Even so, we know that the company now expects annual revenue growth will come in at the top end of its forecast range. While CEO Tadeu Marroco thinks any tariff-related costs can be absorbed by margins, any backtracking by Donald Trump could also provide a boost.
On the other hand, it’s only a matter of time before new regulations on the sale of nicotine pouches are introduced. This could lead some to take profit and move on, especially as sales of traditional tobacco continue to decline.
Whether those investing for income will be among the sellers is open to debate, though. A chunky 5.8% dividend yield, sufficiently covered by profit (as things stand) could be deemed sufficient compensation.
Boring but beautful
Also riding high is savings and investment company M&G (LSE: MNG).
Like British American Tobacco, this isn’t the sort of stock to get the pulse racing. However, the share price is up 34% in 2025 alone — more evidence that one doesn’t need to own glitzy tech-stocks to make a killing.
M&G’s purple patch can be attributed to various developments. In May, a strategic partnership with Japanese insurer Dai-ichi Life was announced with the latter taking a 15% stake. Elsewhere, the market has been cheering cost-cutting measures, pushing operating profit higher.
Massive dividend yield
But, of course, many/most investors continue to be attracted by the potential income stream. Despite the jump in price (which pushes the yield down), M&G stock yields a monster 7.8%. Given that the average across the index is around 3.3%, this unsurprisingly makes the company one of the biggest payers in the entire FTSE 100.
On top of this, the shares still look cheap relative to rest of the UK market with a price-to-earnings (P/E) ratio of 10.
No investment is completely safe, however. For M&G, the aforementioned alliance with Dai-ichi Life — while offering opportunities to grow — has execution risk.
Personally, I’d be surprised if the current momentum lasted for the rest of the year. But, again, many will likely consider staying invested for the dividends.
