I have some cash to invest after the holiday shenanigans and the fancy of getting a very high upfront income FTSE100 dividend stocks? One of my favorites has a yield of almost 7%, and its share price is also going up.

The company is an insurer and asset manager M&G (LSE: MNG). It separated from Prudential in 2019 and has quietly become an attractive option for income investors who also want a miniature capital raise. Will he still be able to fly in 2026?

M&G provides huge revenue and growth

M&G specializes in savings and investment management for retail and institutional clients, ranging from individual pension schemes to multi-asset funds. The company’s shares are up about 55% in three years, with most of that action coming in 2025. The company’s shares are up 46% in the last year alone, which will be a useful bonus for anyone who bought it primarily for its dividend.

I was equal parts delighted and surprised when I added this amount to my Self-Invested Personal Pension (SIPP) in 2023, when the yield was around 10%. So far I’ve got about 75% overall.

I am also generally positive about the coming year. Base rates have just been cut to 3.75% and some expect them to hit 3% this year. This reduces the risk-free return on cash and bonds, making high-yield dividend stocks more attractive by comparison.

Cash flow and additional capital

Management has generated a huge surplus of capital and appears to be able to cover the dividend. Since making the changes, M&G has increased payouts every year, five in total, although the raise in 2023 was modest at 0.51%. The company also lowered its dividend growth targets to a more conservative 2% per year, but this should keep payouts stable.

On December 17 UBS downgraded the stock from Buy to Neutral, stating that it appears fairly valued. I admit it’s a disappointment for bargain hunters. This also reflects my view that share price growth is likely to snail-paced from here.

UBS noted that M&G’s capital adequacy ratio of 234% is one of the highest in the industry. However, he warned that M&G would be exposed if at any point there was a major stock market crash. A real tycoon could reduce its capital adequacy ratio to 170%, but this would still provide it with a decent capital cushion. As things stand, UBS believes M&G has opportunities to raise returns for shareholders. I think this stock is still worth considering for income-oriented investors willing to hold it for the long term.

At today’s price of 291p, £2,000 would buy approximately 687 shares. In 2024, the company paid a total dividend of 20.1p. If it grows by 2% in 2025, it would pay out 20.5p, generating around £140 in income from this holding. It’s modest at first, but reinvesting your withdrawals and growing your position over time can translate into a significant stream of passive income.

Building long-term wealth

As always, diversification counts. Owning a combination of dividend stocks along with other types of assets can provide sleek returns and manage risk. Investors looking for recovery potential may want to look elsewhere in the FTSE 100. Despite fantastic recent growth, there are still bargains to be had.