It’s effortless to look at FTSE100 and cheer. The blue-chip index hit a recent all-time high this month, breaking through the 10,000 mark for the first time in history.

But the flip side of a rising price is a falling dividend yield. It has now dropped to around 2.9%.

This could be bad news for income investors. But Good The news is that investors can try to cushion the impact of falling FTSE 100 yields.

Invest more to earn more

One of the simplest is to put more money into the market.

By increasing the size (or frequency) of regular payments, it will be possible to obtain more dividends, even if the profitability of the index of the largest companies declines.

It’s not rocket science – but while the approach is straightforward, it can work.

Looking beyond the FTSE 100

Another approach would be to look at stocks outside the FTSE 100.

Over the last five years, the FTSE 100 index has increased by 59%. Smaller for a change FTSE250 the index increased by only 15% during this period – and currently stands at 3.5%. This is still not a huge yield, but it is clearly higher than the FTSE 100 offers.

Even though the FTSE 250 is more profitable, dividends are not the only source of return for shareholders. The dramatic difference in price performance over the past five years shows just how critical price changes can be. The FTSE 250 has significantly underperformed the FTSE 100 on this measure, although past performance is not necessarily indicative of what will happen in the future.

However, I believe investors should remember that there is life beyond the FTSE 100, whether in the FTSE 250 or in the immense number of other stocks listed in London but not included in any index, or on overseas markets.

However, when investing, I like to stick to what I understand, so whether I’m at home or abroad, I look for companies that I feel I understand.

Focus on dividend growth potential

A third way to try to earn a larger dividend over time is to look for companies that appear to be consistently increasing their dividends per share.

Some even state this as a goal: this is known as having a progressive dividend policy.

One such company is British-American tobacco (LSE: BATS).

It has been a member of the FTSE 100 since the index’s inception (albeit with a minor name change) and remains so. But while the FTSE 100 yield is 2.9%, the UK US stock market yield is almost double that, at 5.5%.

This reflects dividends per share growing annually for decades.

This incredible dividend record – which management intends to continue with annual growth – reflects tobacco’s sturdy economics.

Cigarettes are budget-friendly to produce and can command high prices, helped by a unique collection of premium brands such as Dunhill AND Pall Shopping Center.

However, fewer cigarettes smoked come with a risk of sinking profits. The company is expanding its non-cigarette business to include products such as vaporizers.

Time will tell if they will ever be as profitable as cigarettes. They also raise ethical concerns for some investors, such as cigarettes.

However, from a long-term earnings perspective, I believe this is a stock that investors should consider.