In 2024, dividends were introduced at 6p per share and in 2025, this was boosted to 9.5p. 

The full dividend is now forecast to reach 14.3p by 2027 and 17.3p by 2028. It’s realistic to assume that by 2029, they’ll be paying out over 20p per share.

But if today’s price of £12.28 holds, that only equates to a meagre yield of around 1.7%. Sure, it’s a step up from 0% but still, not much.

Of course, if the share price dips, the yield will ramp up. But that’s hardly encouraging if you’re looking to invest today.

So what does the dividend story look like going forward?

Valuation matters

If you bought 333 shares today, it could bring in around £220 in dividends over the coming three years. From an investment that currently costs around £4,089, that’s not much.

In 5-10 years, Rolls may once again be a top dividend-payer on the FTSE 100. But at the current valuation, it doesn’t make much sense for income investors.

Don’t get me wrong – the company’s doing a great job of rewarding shareholders. But after a 1,000%+ price rally, the yield simply can’t compete with the growth.

So what looks better right now?

When thinking in terms of income, it pays to lock in a dividend share when the price is low and yield high. That way, if the price rises and yield dips, your shares still pay out at the yield you bought. Plus, any capital gains add value to your investment.

Currently, Hikma Pharmaceuticals (LSE: HIK) appears to fit that narrative. In 2025, it paid a full year dividend of 84p per share, which is expected to reach over 100p by 2029.

At £14 a pop, 333 shares would cost around £4,662 – not cheap! However, over a three year period, they’d pay out £617.88 in dividends.

That’s still not life-changing money, but the key here is valuation. The price is estimated to be only 8.6 times forward earnings, while Rolls’ is closer to 32 times!

In my opinion, that growth potential combined with the higher yield could deliver far greater returns than Rolls.

After all, the average 12-month price target from 11 analysts monitoring Hikma is £18.77. That’s a potential 33.9% increase from today.

So what’s the catch?

Rolls and Hikma are very different companies, so a purely income-based comparison doesn’t tell the full story. While Rolls still benefits from recovery momentum and steady government contracts, Hikma faces more immediate challenges.

In February, it downgraded its 2026 guidance as stiff competition hurt its injectables business and US tariffs ramped up costs. But it still has a solid pipeline of products in play, so I think it’ll recover quickly from this short-term dent. As always, nothing is guaranteed.

On balance, Hikma is the more appealing stock to consider for investors targeting income over the coming three years. For Rolls, I’d take a breather and see where the price goes before revisiting the stock.

The post How much passive income could 333 Rolls-Royce shares pay out in 3 years? appeared first on The Twelfth Magpie.

I’d say the answer’s yes, but in a different way.

Anybody buying Rolls-Royce today has to accept the shares aren’t going to rise another 1,033% in the next five years. This is now a £100bn company, so that would turn it a massive £1.1trn enterprise. Today, the FTSE 100 is only worth £2.5trn in total.

Can this FTSE 100 stock climb higher still?

Any investor considering Rolls-Royce shares therefore must accept the growth must slow. CEO Tufan Erginbilgiç has worked wonders since January 2023, but the group’s stellar post-pandemic rebound has run its course. Over one year, the shares are still up an impressive 55%. But they’ve edged up just 5% in the last six months. And fallen 4% in the last month. The trend’s clear.

I can see why investors would consider taking profits today. Especially if they got in early, and Rolls-Royce makes up a big chunk of their overall portfolio. Some investors set a rule of never putting more than 5% or 10% in any one stock. That’s wise. Yet I still think it’s worth retaining exposure to Rolls-Royce.

This is still a brilliant British company with long-term growth opportunities across all three of its divisions – civil aerospace, defence and power systems.

Three reasons to consider buying

• Rolls-Royce can still roar. In 2025, it posted a 40% increase in underlying operating profit to £3.5bn. Highlights included a strong turnaround in civil airspace, booming demand for data centre power and continued high defence spending.
• Nuclear power offers a huge opportunity. Its small modular reactors (or mini-nukes), are attracting interest from the UK, Czech Republic, Sweden and beyond.
• Investors won’t just get growth. The board recently announced share buybacks of £7bn to £9bn in total between 2026 and 2028. There are dividends too, although the forecast yield is a modest 1%.

Three reasons to be cautious

• Rolls-Royce shares are expensive. Today, the price-to-earnings ratio is 41. That’s down from more than 65 just a few months back, but is still well above the FTSE 100 average of around 15.
• There’s little room for error. After all the excitement, any slight miss in future profits or earnings could be heavily punished.
• The Iran war is a risk, as Middle East travel hubs close and jet fuel shortages loom. This threatens civil aerospace revenues, where lucrative maintenance contracts are based on miles flown. A wider recession would be an issue too.

I still think Rolls-Royce has a role to play in a balanced portfolio. However, investors will have to get their rewards from a combination of steady growth, dividends and buybacks over the years. Anybody wanting a more jazzy recovery play should consider looking elsewhere. The next Rolls-Royce is out there. I’m determined to find it.

The post Investors need to face the truth about booming Rolls-Royce shares  appeared first on The Twelfth Magpie.

• Early data suggests little-to-zero impact on flying hours from the Iran war.
• A significant contract signed on the introduction of SMRs (small modular reactors).
• A monster of a trading update, sending the share price up 8% on the day.

The upshot is that a number of analysts have been waxing lyrical about the stock. With many such analysts putting a £15 12-month price target on Rolls-Royce, it could mean it’s more likely the shares will surge by 20% or more in the next year.

Good cheer

Perhaps the most surprising titbit was the impact on flying hours for Rolls-Royce engines. The company announced that these had already recovered to pre-conflict levels. It turns out the vast majority of the issues were for the narrowbody sector, which the company has no dealings in.

There is a risk to be aware of here too. Rolls has plans to enter the narrowbody market in the near future. A prolonged Iran conflict may have some impact further down the line.

The second bit of good cheer came by way of progress on SMRs in Czechia. Terms have been agreed to build the first of six of these small nuclear power stations in the Central European country. The contracts have now entered the ‘execution phase‘ and the firm is expecting to generate revenues and profits this year. This is a giant leap for those of us who believe SMRs are one of the most realistic options for a future filled with green energy.

A possible buy?

The icing on the cake was the trading update to 31 March 2026. It’s been good news after good news from the company in recent years and this was no exception – the firm adding billions in market-cap in a single day.

The highlights? Outside of the two things mentioned above, reiterating guidance in the wake of a potentially impactful conflict in the Middle East was promising, and both operating profit and free cash flow are set to grow in the year ahead too.

It’s worth pointing out that Rolls-Royce now looks somewhat expensive compared to many other FTSE 100 stocks. The forward price-to-earnings ratio of 32 is not exactly cheap. We may need to see many more positive trading updates to justify the heady number.

On balance? It looks like the company is navigating what could have been a very difficult year. I believe a £15 share price doesn’t look too far away at all. The stock could be worth considering.

The post Is £15 the next stop for the Rolls-Royce share price? appeared first on The Twelfth Magpie.

But why am I looking at a specific £8,580 invested in the company in May 2025? That’s because it would now be worth a staggering £100,000. And just £858 would have grown into a cool 10 grand. At least, that’s based on the 1,186p share price at the time of writing. It might be a bit different by the time you read this.

And here’s an interesting snippet. Rolls-Royce is forecast to pay a dividend of 10p per share this year. That would mean a yield of only 0.84% on the current share price. But an investor who bought five years ago would see a 9.8% yield on the price they paid back then!

Pausing for breath?

Now, it might be verging on madness to expect the same kind of returns over the next five years. I mean, it would need another 1,046%. And that kind of thing tends not to happen too many times in a row.

Rolls-Royce shares have backed off a bit from their 2026 high too. And we’re looking at a 19.8% fall since 26 February. Just think, if the price hadn’t fallen back, that initial £8,580 could now be worth £119,750!

Does that mean the cracking growth surge of the past few years has reached its climax, and it’s all yawning boredom from now on? A couple of things suggest Rolls-Royce shares might only be taking a bit of a breather.

The dip coincides with the Middle East turmoil. Flights cancelled, fuel prices through the roof… that’s not a good combination. But I’d say the fall has been quite modest. And there’ll surely be hopes of a defence sector boost from it all.

Stunning forecasts

Then we come to analyst forecasts. Between 2026 and 2028, they predict:

• Earnings per share rising 36%
• Price-to-earnings (P/E) falling from 32 to 23
• Net cash growing 83% to £5.4bn

That doesn’t really sound to be like a company running out of steam, does it?

Oh, and the most optimistic of them sees Rolls-Royce shares climbing a further 47% — and broker targets tend to be on the short-term side too. Admittedly they’re not all as optimistic as that — there’s one sourpuss who sees the shares dropping 7%. But even the average target would mean a 19% share price rise from today.

Done and dusted?

Despite analyst enthusiasm, I put Rolls-Royce shares among the FTSE 100‘s riskiest at the moment. The main uncertainty I see is how long it might take to reach profits from small modular reactors (SMRs) — Rolls estimates not before 2030. And what will happen to profits in the few years before then?

Rolls-Royce shares are not for me, with my low-risk preference. But long-term growth investors could do well to consider Rolls if we have any further dips in 2026.

The post £8,580 invested in Rolls-Royce shares shares 5 years ago is now worth… appeared first on The Twelfth Magpie.

However, the tide has started to change in the last few years. In fact, some of this poor performance has created many cheap shares and high dividend yields.

If we’re looking at nominal increases only (ignoring dividends), the last decade has seen the Footsie climb by 66.3%. That’s not bad… but it’s not overly impressive either.

But if we also account for dividends, investors’ returns in the index have proven much more lucrative. The Footsie returned an average annual return of 9.2%, equating to a total return of 140.2% in that period. That’s much more like it!

Given that dividends have been significantly important to its returns, let’s look at some of the highest-yielding stocks in the index.

Plenty of options

On the whole, the FTSE 100 has a pretty decent dividend yield of 3%. The S&P 500, the main stock market index in the US, has a comparatively lower yield of 1.1%.

This is because there are plenty of companies in the FTSE 100 that offer yields that would make income investors’ mouths water:

It should be noted that dividends aren’t guaranteed, but the above represents the top five yielding stocks in the UK’s top stock market index right now.

Legal & General shares offer a particularly attractive passive income opportunity for investors to consider.

For example, if investors wanted to make an extra £200 a month, buying 10,968 shares in the company could help to target this second income. This would cost £28,072.60 at the firm’s current share price of 255.95p.

But not every great stock pays a high dividend. I believe there’s one that presents a great opportunity for investors to consider.

Great potential

I believe Rolls-Royce (LSE:RR.) is one of the top UK shares right now.

There are risks for the company. Most notable is the war in Iran and how it could potentially cause a jet fuel shortage. This could be a real problem for the firm in the short term, as it could result in fewer flights taking place, and in turn lower demand for the company’s aircraft engines and maintenance.

However, the longer-term thesis remains intact, with many promising areas of the business showing great potential.

One example is its Defence division. The sad reality of the times we live in is that global wars are becoming more prominent. Rolls-Royce stands to benefit from this. In its latest trading update, it showed that original equipment defence deliveries increased by 20% year on year.

Furthermore, the firm’s power systems division looks set to help power the rise of AI. It currently has a backlog of £7.3bn, and as more money on AI data centres is spent, the aircraft engine manufacturer should thrive.

Therefore, I think investors should consider buying Rolls-Royce shares.

The post £10,000 put into the FTSE 100 a decade ago is now worth… appeared first on The Twelfth Magpie.

Clearly, the rising cost of jet fuel resulting from a lack of supply is taking its toll on airlines. Lufthansa has announced that it will cut 20,000 European short-haul flights over the summer. Others have made similar decisions. Rolls-Royce generates revenue every time one of its engines is used. Fewer flights will likely reduce earnings. But are investors being overly cautious?

Nothing to see here

Based on the group’s 30 April trading update, it appears they may be.

Ahead of its annual general meeting, the group said it expected to “fully mitigate” the current financial impact of the disruption. Perhaps surprisingly, there was no mention of what might happen if the conflict continued. The update was very bullish.

Indeed, large engine flying hours increased by 5% during the first quarter of 2026. And while Lufthansa’s decision to cancel flights sounds dramatic, it has to be remembered that the German airline currently operates around 3,000 a day.

Some of Rolls-Royce’s ability to cope with the fallout from the war can be attributed to the fact that it’s not a one-trick pony.

As well as its aerospace division, it has significant exposure to the defence and power systems sectors. Both of these had a “strong start to the year”. The latter reported a record month for orders in March. Data centres and government were the biggest contributors.

Business as usual

Looking further ahead, its small modular reactor (SMR) programme remains on schedule. Rolls-Royce boasts that it’s “the only company with multiple contractual commitments to deliver SMR units in Europe and is well placed to become a market leader globally.”

Overall, the group reiterated its 2026 guidance of £4bn–£4.2bn of underlying operating profit and £3.6bn–£3.8bn of free cash flow. For comparison, in 2025, these were £3.5bn and £3.3bn, respectively.

We have had a strong start to the year driven by our transformation and self-help, as we continue to further expand the earnings, cash, and growth potential of the business. Operational performance has also been strong across the Group, benefiting our customers.

Tufan Erginbilgic, Chief Executive, Rolls-Royce Holdings

My view

In my opinion, the group’s shares are well worth considering by those investors with a long-term outlook.

Of course, there could be some bumps along the way. Despite the group’s optimism, there’s bound to be some impact on its civil aerospace business if the blockade of the Strait of Hormuz continues. And even after the recent pullback, I don’t think the group’s shares can be described as cheap.

However, it has exposure to markets that are all performing strongly for different reasons. This helps spread operational risk. But if all three grow at the same time — as they are at the moment – there’s a good chance that Rolls-Royce will be in a position to upgrade its earnings and cash flow forecasts yet again.

I think last week’s trading update demonstrates the resilience of the business and should reassure investors that it’s well positioned to cope with any short-term disruption that comes its way.

The post Could the Rolls-Royce share price be on the turn? appeared first on The Twelfth Magpie.

With new orders flooding in, margins expanding, and cash flow running at structurally higher levels, the business looks set for strong growth ahead. Rolls-Royce is also benefiting from a leaner cost base, stronger pricing power, and a defence arm delivering rising, high‑quality earnings.

Consequently, this rare pullback in price looks like an unmissable opportunity to build my position at a lower price.

How does the growth momentum look?

Sustained earnings momentum drives a company’s share price higher over time, and Rolls‑Royce continues to deliver it. A risk here is any prolonged supply‑chain constraint that slows engine servicing, and another is any unexpected downturn in large‑engine flying hours.

Even so, underlying operating profit soared 41% year on year to £3.5bn, highlighting the group’s operational transformation and commercial optimisation. Operating margin expanded from 13.8% to 17.3%, illustrating the structural uplift from efficiency and simplification initiatives.

Free cash flow surged 35% to £3.3bn, underlining the strength of aftermarket profitability and long‑term service agreement growth.

As a result, management upgraded mid‑term targets to £4.9bn-£5.2bn operating profit, 18%-20% margins, and £5bn-£5.3bn free cash flow by 2028.

Together, these elements mean the business now has far greater earnings power than at any point in its modern history.

How undervalued are the shares?

Because price and value are not the same measure in financial assets, a stock can still have much value left in it even after a big price rise. This is because value relates to a range of underlying business fundamentals. But price is just a function of supply and demand in the market at any given time.

Illustrating this point perfectly is Rolls-Royce. Despite the stock’s huge price gain over three years, it is still bottom of its competitor group on the key price-to-earnings ratio. Its rating of 16 is very cheap against the peer average of 28.8. These firms consist of Northrop Grumman at 17.9, BAE Systems at 29.3, RTX at 32.3, and TransDigm at 35.9.

Moreover, the mean average one-year target price of the 19 analysts covering the stock is £13.99. That is 16% higher than where the stock trades today.

All of this points to a company whose valuation still has not caught up with its transformed fundamentals. And when price lags value by this much, it usually creates a great opportunity for savvy long-term investors.

My investment view

As a long-term investor, and hopefully a savvy one, I cannot pass this opportunity up. I initially bought the stock at around £3, then again at about £6, and then at roughly £9.

On each occasion, many in the markets were saying the price had run its course, ignoring the remaining value. So I will go my own way again and snap the stock up once more at the earliest opportunity.

I also have my eye on other stocks with similar strong underlying growth momentum to Rolls-Royce, which also look underpriced.

The post Down 14% to around £12! Rolls-Royce shares look too good an opportunity for me to pass up right now appeared first on The Twelfth Magpie.

But as a reminder that you don’t have to be an early-stage investor to be a winner, Warren Buffett’s Berkshire Hathaway didn’t invest in Apple until after iPhone 6 was launched. Since then, it’s estimated that the investment vehicle has realised gains of over $160bn from the stock.

With this in mind, could recent wobbles in the Rolls-Royce share price be an ideal opportunity for those who’ve missed out previously (and others) to consider the stock?

What’s going on?

Understandably, investors have concerns that Rolls-Royce could be affected by events in the Middle East, particularly if the current stand-off continues.

With soaring jet fuel prices and flight cancellations, the group’s civil aerospace division could see a material drop in the number of hours that its engines are flown, which is the basis on which it generates the majority of its revenue.

Positively, a trading update on Thursday (30 April) reported: “We expect to fully mitigate the current financial impact of the disruption to our business.”

Personally, I’m not too concerned at this stage. I’m sure the war will end soon (something we all hope for). And the group’s post-pandemic recovery is a reminder of how resilient the aviation industry can be.

Indeed, it’s the long term that really counts when it comes to investing. That’s why the recent fall in the group’s share price could be an opportunity. Remember, not so long ago — March, in fact — its shares were changing hands for 17% more than they are today (4 May).

Why?

Personally, I think there’s huge potential for the group from its small modular reactor (SMR) programme. These factory-built mini nuclear power stations have a number of competitive advantages:

• Low cost – many large-scale plants run hugely over-budget.
• Deliverable – built using proven and commercially available technology.
• Global – the technology can be deployed anywhere in the world.
• Scalable – standardised off-the-shelf components.

The key is modularisation, which involves doing as much as possible inside a factory. Not only does this help maintain quality but it also reduces the opportunity for on-site disruption.

And with the growth in data centres putting a strain on existing energy infrastructure, SMRs could prove to be highly lucrative. Indeed, the group’s boss thinks it could help make Rolls-Royce the UK’s most valuable company.

Rolls-Royce SMR is the only company with multiple contractual commitments to deliver SMR units in Europe and is well placed to become a market leader globally

Tufan Erginbilgic

Of course, there are no guarantees that the technology will work. And its commercial viability is unproven. There’s also a risk that investors have already priced in some of the potential gains. And even if everything goes to plan, it’s unlikely that any significant revenue will be generated from SMRs until 2030 at the earliest. That’s why I believe it’s important to take a long-term view.

Personally, I think the SMR programme adds another string to the group’s bow. Importantly, it reduces its reliance on the aviation and defence sectors, which helps spread risk.

The group’s already signed agreements in Estonia, Türkiye, and the Czech Republic. And it’s working with Great British Energy to design and deliver the UK’s first reactors.

The post 17% below their 52-week high, is now an opportunity to consider Rolls-Royce shares? appeared first on The Twelfth Magpie.

But is the growth story now over? Or are Rolls-Royce shares getting ready to double once again?

The bull case is hard to ignore

Three powerful tailwinds are pushing each of Rolls-Royce’s core divisions forward. Long-haul flying demand continues to recover robustly, and Rolls-Royce’s large installed base of engines generates strong and recurring aftermarket revenues every time a plane flies. And it’s why underlying civil aviation revenues grew by another 24% organically in 2025.

The second tailwind is defence spending. With European nations scrambling to modernise their militaries in response to a deteriorating geopolitical environment, Rolls-Royce’s defence segment has already seen its order book grow drastically, with the company sitting at the heart of the rearmament wave.

The third factor is the group’s remarkable operational transformation. Since moving into the corner office, CEO Tufan Erginbilgiç has driven a relentless focus on margins and efficiency. The result has been a massive resurgence in free cash flow that’s on track to reach as high as £4.5bn by 2028.

Assuming the target’s hit, it not only helps resolve Rolls-Royce’s long-standing debt problem but also gives leadership enormous volumes of financial flexibility to reinvest and explore new ventures, including its promising small modular reactor technology.

Can Roll-Royce double again?

It’s easy to understand why the pros are bullish about this business. But for investors hoping for Rolls-Royce shares to double again, it isn’t going to be an easy feat. After all, that requires the company to grow its market-cap from around £95bn right now to £190bn. That isn’t impossible, but it’s likely going to take a lot longer than a single year.

With the group’s 2028 targets already baked into the share price, the business would need to either vastly exceed these expectations or trigger a re-rating for its valuation multiple.

A multiples upgrade seems unlikely given its forward price-to-earnings ratio already sits at a lofty 29.8 times. As for beating expectations, that too looks a bit unlikely in the near term.

There’s no denying that management has developed a knack for exceeding its own targets in recent years. But with the ongoing conflict in Iran and the enormous supply chain disruptions it’s created, particularly for jet fuel, the group’s flagship civil aerospace segment looks vulnerable to a slowdown.

This impact may ultimately be offset by higher defence spending. But it nonetheless makes overall growth a lot harder compared to previous years. And after delivering an 12x return over the last three years, any surprise disappointments could be punished harshly.

The bottom line

As a business, Rolls-Royce is genuinely impressive. But as a stock, I think it might have some tough times ahead. Having said that, if a slowdown does materialise and the share price slides, then that could present a lucrative and exciting entry point for long-term investors looking for a quality compounder.

That’s why, for now, I’m keeping it on my watchlist.

The post Could I double my money with Rolls-Royce shares? appeared first on The Twelfth Magpie.

On Friday (30 April), the engineering group wowed investors again with a strong set of Q1 results. Its Civil Aerospace, Power Systems and Defence divisions all picked up where they left off in 2025. How does Rolls-Royce keep doing it, especially as war in Iran rattles markets?

The Civil Aerospace division generates most of its revenues from aircraft engine maintenance contracts, which are based on miles flown. With hubs such as Dubai, Doha and Tel Aviv disrupted, I expected a hit here. So far, Rolls-Royce has shrugged that off.

How long can this stock carry on climbing?

Power Systems revenues rose again, driven by AI data centre generation. Defence is a good place to be right now. Interestingly though, pureplay defence stocks such as BAE Systems and Babcock International Group both dropped over the past month, possibly after becoming overstretched and triggering profit-taking. That’s less of an issue for Rolls-Royce, thanks to its three-way diversification.

Its shares climbed a modest 5% over the month. They’re now up 53% over one year, and an extraordinary 1,023% over five. That’s impressive, but no stock rises forever. Not even this one.

But I’ve been digging through broker forecasts, and was stunned. They’re way more optimistic than I expected.

In total, 18 analysts supply one-year price targets, producing a consensus of 1,428p. If correct, that implies a gain of more than 18% from today’s 1,206p. I think that’s impressive, given its barnstorming run. If correct, it would lift its market cap towards £120bn. One broker even forecat the shares could hit 1,740p, a 44% gain.

It’s also worth noting that 15 out of 20 brokers rate Rolls-Royce a Strong Buy, with two more calling it a Buy. Not a single one of them says Sell.

Dare investors buy at this price?

Of course, there are risks. High expectations are a threat in themselves. If Rolls-Royce disappoints at some point, the backlash could be severe. Management has big ambitions, including small modular nuclear reactors, or mini-nukes. That brings execution risk. There are also technical issues with some newer aircraft engines. Middle East airspace may be opening, but jet fuel shortages over the summer would hurt. Data centres are a major opportunity, but they’re expensive and take up a lot of land. Nobody wants a super-sized AI box dumped in their back yard.

Also, Rolls-Royce shares look expensive, trading on a price-to-earnings ratio of around 40. However, it was a lot higher just a month or two ago, when the P/E touched 65. That’s when I decided things had gone too far. I don’t think that today. The group has launched a three-year share buyback worth £7bn to £9bn, dividends are edging higher, and full-year 2026 guidance has been reaffirmed.

This is a brilliant company, and I’m happy to hold it in my portfolio. Common sense says that growth will inevitably slow from here. But I still think it’s worth considering today. Even more so if the market dips in the days ahead.

The post Can the Rolls-Royce share price defy gravity again? Check out the latest head-turning forecast appeared first on The Twelfth Magpie.