3 FTSE 100 dividend stocks I’m considering buying after the latest market crash

The yields on FTSE 100 (INDEXFTSE: UKX) dividend stocks are increasing, explains Edward Sheldon.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

While the market sell-off over the last week has been frustrating, it’s also created a lot of opportunities for dividend investors. Many FTSE 100 dividend stocks have been indiscriminately dumped, and as a result, there are some interesting dividend yields appearing.

Today, I’m looking at three that I don’t yet own, but I am considering buying after the recent stock market rout.

Hargreaves Lansdown

Hargreaves Lansdown (LSE: HL) is generally considered more of a growth stock than a dividend one as it trades on a high valuation. Yet after the recent market sell-off, the prospective yields for this financial year and next are now 2.5% and 2.9% respectively, which look attractive when you consider that the group has lifted its payout by over 500% in the last decade. 

I’m a huge fan of Hargreaves’ investment platform, simply because it’s so easy to use. Whether you want to buy a stock or a fund, Hargreaves makes the process very straightforward. It’s no surprise the company has such a high market share. I also like the long-term story – Britons desperately need to save more for retirement, and as a market leader in the investing space, HL looks well placed to capitalise.

While the stock has fallen from £22.60 to £18 in the last two weeks, it’s still a little too expensive for my liking, as the forward P/E is 31.3. I’m watching this one with interest – if it falls a little further, I may just pull the trigger and buy it.

Reckitt Benckiser

Next, I’m also monitoring consumer goods champion Reckitt Benckiser (LSE: RB), which owns a large portfolio of well-known health and hygiene brands that consumers buy in good times and in recessions. Its shares have lost 10% since early October.

I view Reckitt as a high-quality company that has a compelling long-term growth story in the form of emerging markets exposure. I believe it looks well placed to benefit from rising consumer spending and population growth across those emerging markets, particularly after the recent acquisition of baby-milk specialist Mead Johnson.

Reckitt currently trades on a forward P/E of 19.5 and offers prospective yields of 2.6% and 2.8% for this year and next. Ideally, I’d like to be picking up a little more value here as growth is a bit slower, so I’m going to hold off on buying for now. However, if the stock keeps falling, my interest will definitely increase.

Johnson Matthey

Lastly, £6bn market cap Johnson Matthey (LSE: JM) has also attracted my interest after the recent market volatility. Very much an under-the-radar stock, it researches, develops and delivers technologies to help build a cleaner, healthier world and so should be well placed to benefit as society becomes more focused on environmental protection and sustainability.

With a prospective yield of 2.8%, JM is certainly not the highest-yielding stock in the FTSE 100. That said, there’s a lot to like about the company from a dividend investing perspective as it has an outstanding dividend growth track record and also has very strong dividend coverage. Indeed, the company has now notched up 20 consecutive annual dividend increases, and with forecast earnings and dividends this year of 227p per share and 85.9p per share respectively, dividend coverage looks very robust at 2.6 times.

Trading on a forward P/E of 13.6, the investment case here is beginning to look interesting.

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.

Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown. 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.

More on Investing Articles

Investing Articles

How I’d invest £10k to target a 7% dividend yield and passive income

Zaven Boyrazian outlines the tactics he’d use to build a high-dividend-yield portfolio that could earn him tremendous passive income in…

Read more »

Investing Articles

If I’d invested £5,000 in an S&P 500 index fund 5 years ago, here’s how much I’d have now

Zaven Boyrazian looks at the S&P 500 index's performance over the last five years. Has an index fund been a…

Read more »

Investing Articles

1 terrific FTSE 250 stock I’m buying in November without hesitation

This well-known FTSE 250 stock’s generated over 500% in returns since 2014, but this growth could be just the tip…

Read more »

Investing Articles

Where might the FTSE 100 go in the next 12 months? Here’s what the experts think

The FTSE 100’s up almost 24% since last November! But the big question now is, what could happen next? Here…

Read more »

Front view photo of a woman using digital tablet in London
Investing Articles

If I invest £10,000 in Legal & General shares, how much passive income could I receive?

Legal & General is a popular dividend stock that British passive income investors love. Our writer calculates how much a…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

Here’s how I’d target a £20k+ passive income by investing just £50 per week!

With the right approach, it really is possible for investors to build a healthy passive income for life. Here's how…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

7%+ dividend yields! 3 FTSE 250 shares I’d buy to target a £1,140 passive income

The dividend yields on these UK shares smashes the FTSE 250 forward average of 3.5%. Here's why I'd buy them…

Read more »

Investing Articles

2 UK shares for value investors to consider buying

In the UK, shares in a FTSE 100 housebuilder and a FTSE 250 boot business stand out to Stephen Wright…

Read more »