These FTSE 100 dividend stocks offer yields I find hard to ignore. Here’s why I’d buy them today and look to hold them for years.
National Grid
Dividend yield for this year: 5%
National Grid’s (LSE: NG) ability to continue raising dividends during Covid-19 perfectly illustrated its excellent defensive qualities. Electricity demand remains pretty constant whatever crisis comes down the line. And so the power infrastructure business enjoys excellent profits stability.
Should you invest £1,000 in Barratt Developments right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Barratt Developments made the list?
This is why City analysts expect the business to keep growing dividends this year and next too. Forecasters project rewards of 53.2p and 55p in fiscal 2024 and 2025 respectively. As a consequence, yields sit at an excellent 5% for this year and 5.2% for next.
I am concerned about how National Grid’s capital-intensive operations could hit dividend levels in the near term and beyond. I’m also keeping an eye on how climate change could drive the company’s cost base higher.
Last week, the government said network operators must “review their severe weather escalation plans, improve their communications systems, and strengthen their compensation payment mechanisms”. This follows the damage caused by Storm Arwen in the autumn.
All things considered however, not many FTSE 100 firms have the supreme profits visibility of National Grid. The critical role it plays in keeping the lights on, along with its monopoly on maintaining the UK’s electricity infrastructure, make it a top dividend stock to buy.
Barratt Developments
Dividend yield for this year: 7.8%
Barratt Developments (LSE: BDEV) doesn’t have the same non-cyclical qualities as National Grid. In theory, it faces weak sales growth, or even a top-line reversal as economic conditions worsen.
In practice however, housebuilders like these continue to thrive. There simply aren’t enough new homes to go around. And thanks to historically-low interest rates and ongoing government support, demand continues to outpace supply.
In fact, homebuilder Crest Nicholson last week upgraded its full-year earnings forecasts on the back of exceptional trading conditions. Revenues here leapt 12.3% in the six months to April. This follows Barratt’s recent update in which it predicted completions would rise between 4% and 6% this year.
Analysts expect Barratt to grow earnings 22% in the financial year to June. And they predict a 1% rise in the upcoming fiscal year too.
However I think there’s a strong chance profits here could also surprise to the upside. And I don’t think this is reflected in the firm’s low valuation. Today, the business trades on a price-to-earnings (P/E) ratio of just 6.4 times for fiscal 2023.
Regardless, City brokers think these forecasts will be enough to drive dividends sharply higher during the period. Payouts of 39.7p and 46.2p per share are predicted for this year and next respectively. So subsequent yields clock in at a 7.8% and 9.2%.
Demand for Barratt’s homes could come under pressure if the Bank of England keeps frantically raising interest rates. But, as things stand, I think the massive rewards I could receive from owning the business makes it a great FTSE 100 share to buy.
