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I think there’s never been a better time to buy these 3 FTSE 100 dividend stocks

Roland Head
Compass pointing towards 'best price'

The FTSE 100 offers investors a generous 4.3% dividend yield at the moment. But many individual companies offer much higher payouts.

It pays to be careful with very high dividend yields. But I think I’ve found a handful of FTSE 100 stocks that offer truly outstanding buying opportunities for patient investors.

Today, I want to look at three of these businesses, including two I’ve been buying myself.

Final chance?

I’ve been backing Royal Bank of Scotland Group (LSE: RBS) for a while now and own shares in the bank myself.

For many investors, RBS remains the bank they love to hate. This may have been fair five years ago. But I think the business today is more attractive than it has been for many years.

Departing chief executive Ross McEwan has fixed the bank’s legacy problems, made it profitable again and restarted dividend payments.

Today, the shares trade at a 20% discount to book value and offer a forecast dividend yield of 6.6%. I believe this valuation leaves plenty of room for further gains, if performance continues to improve.

A second opportunity may come when the government finally sells its stake in the bank. This should increase private investor confidence in the stock, as it would remove the risk of political interference.

Mr McEwan will be leaving for a new job in Australia over the coming months. But I believe UK investors have a great opportunity to benefit from his hard work at RBS. I rate the shares as a buy.

Time to be greedy

US billionaire Warren Buffett once famously advised investors to “be greedy when others are fearful”. Investors are certainly fearful of retail property landlords at the moment, such as FTSE 100 REIT British Land (LSE: BLND).

The fear is that even if new tenants are found to replace dying retailers, they will demand lower rents and shorter leases. Perhaps. But British Land has been in business for nearly 70 years and owns a mix of prime London office space and major shopping centres around the UK.

I think the quality and diversity of its portfolio, paired with good management, will mean a solution will be found to the changing needs of retail tenants.

In the meantime, the shares are trading at a 40% discount to their net asset value of 905p and offer a dividend yield of 5.9%.

I can’t predict where the bottom will be for the retail property market. But in my view, British Land is likely to offer good value and a decent income to investors buying at this level.

Power shifter

Gas and electricity network operator National Grid (LSE: NG) is what I’d call a slow burner. The shares are unlikely to double in the next few years. But the dividend has risen from 11.1p per share in 1997 to 47.3p per share today, without any disruption.

Shareholders aren’t completely dependent on the UK market either. The group now generates roughly half its profits in the USA, providing some welcome protection against the threat of nationalisation by a Labour government.

At about 830p, National Grid shares trade on 14 times forecast earnings and offer a dividend yield of 5.9%. I think this could be a good entrance point. If I didn’t already own shares in another utility, I would certainly consider adding this one to my income portfolio.

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Roland Head owns shares of British Land Co and Royal Bank of Scotland Group. The Motley Fool UK has recommended British Land Co. 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.

Motley Fool UK 2019