Here are 10 FTSE 100 dividend shares I’d buy today

UK share prices have taken a hammering this year. But with forecast yields rising, dividend shares look even more attractive to me right now.

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The latest stock market weakness has highlighted the big yields offered by a lot of dividend shares right now. With inflation exceeding 10% and interest rates rising, dividends should surely be under pressure, shouldn’t they? They don’t seem to be.

The latest Dividend Dashboard from AJ Bell suggests 2022 could even be the best year for FTSE 100 cash returns ever. Forecasts put the ordinary dividend total at £81.5bn, and suggest £1.6bn in special dividends.

In addition, FTSE 100 companies have already announced a record £50.3bn in share buybacks.

But we need to be cautious. Analysts’ often take a long time to adjust their forecasts to changing conditions. And a number could well be pared back before that reality is known.

10 dividend shares

Still, I reckon there’s decent safety margin in current forecasts. And I think I see some great FTSE 100 buys. Here are the 10 FTSE 100 shares I’d pick to start a dividend portfolio today.

CompanyRecent share
price
12-month
change
Forecast
dividend
Forecast
P/E ratio
Lloyds Banking Group42p-16%5.0%6.3
Persimmon1,250p-56%18%5.2
National Grid900p-1.4%5.7%8.9
Rio Tinto4,745p-5.0%10.5%6.2
Aviva405p-25%7.5%17
Imperial Brands2,005p+24%7.0%9.0
M&G176p-12%10.8%n/a
Vodafone100p-11%7.6%14
WPP761p-32%4.6%9.6
GlaxoSmithKline1,370p-15%6.4%12
(Sources: AJ Bell, Yahoo!, MarketScreener)

Forecasts vary between sources, and I’ve tried to be conservative. P/E forecasts for M&G are all over the place, with no real earnings expected this year. But analysts seem unanimous in forecasting earnings growth for the next two years, and predict a 2023 P/E of around nine.

Safety vs risk

For safety, I’ve gone for diversification and have avoided going for, say, another housebuilder. I’d never diversify just for the sake of it and buy stocks I wouldn’t choose on their own merits. But, fortunately, there are far more than 10 FTSE 100 dividend shares that I like the look of.

I haven’t covered individual risks, and I think it would be foolhardy to buy any of these individually without doing proper research.

The biggest overall risk that I see is that the dividend forecasts might be wrong and these stocks may not pay what they suggest. If that happens, share prices could fall. And I really do expect some to fall short of predictions. But, for me, that’s a short-term risk. And I’d be buying with a long-term horizon.

Verdict

My big takeaway from this is that dividend yields and price-to-earnings (P/E) ratios mostly look very attractive by long-term standards. A few of these companies are engaged in share buybacks too, so they don’t seem to be short of cash.

And that’s a contrast with today’s seriously negative investing sentiment. But markets always overreact, don’t they?

My bottom line? I already own shares in several of these companies. But if I had the cash to buy all the rest today to make a 10-share long-term dividend portfolio, would I do so? I think I would, yes.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft has positions in Aviva, Lloyds Banking Group, and Persimmon. The Motley Fool UK has recommended GSK plc, Imperial Brands, Lloyds Banking Group, and Vodafone. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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