Two FTSE 100 dividend stocks I’d buy before February

Edward Sheldon looks at two FTSE 100 (INDEXFTSE: UKX) dividend stocks that he believes investors should check out sooner rather than later.

| 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 FTSE 100 has bounced a little in January after falling below 6,600 points in late December as global equity markets tumbled, there is still a lot of value on offer within the index right now. This is particularly true if you’re a dividend investor, as many FTSE 100 companies offer fantastic yields at present. Here’s a look at two high-quality dividend-paying companies that I think are worth buying for income right now.

St. James’s Place

St. James’s Place (LSE: STJ) is a wealth management group that offers advice to individuals, trustees, and businesses. Through a network of nearly 4,000 expert advisers, the company offers services such as investment planning, retirement/pension planning, risk protection, and inheritance planning. The group is clearly good at what it does, as its client retention rate is consistently above the 95% mark.

What I like about St. James’s Place is that the company looks very well placed to help retiring baby boomers with their financial planning requirements in the coming years. The financial environment is challenging at present (low interest rates, volatile stock markets, changing regulation, Brexit uncertainty) and for this reason, I’m convinced that demand for trusted face-to-face financial advice will remain robust in the years ahead. Just last week, the group advised that it continues to see “growing demand” for advice and that it remains “extremely well placed” to continue growing over the medium term.

From a dividend-investing perspective, STJ offers a lot of appeal at the moment, in my view. Last year, the group paid out 42.9p per share in dividends, which equates to a yield of 4.4% at the current share price, and for FY2018, analysts expect a 12% rise in the payout to 48.1p per share, which translates to a yield of 5%. It’s worth noting that the group has an excellent dividend growth history and has never cut its dividend. With the stock down around 20% over the last six months on the back of equity market weakness and currently offering a fantastic yield, I think now is the time to take a closer look.

Smurfit Kappa

Another FTSE 100 dividend stock that has experienced share price weakness over the last six months is Smurfit Kappa (LSE: SKG). It’s a packaging company that has a focus on sustainable products and operates 350 production sites across 33 countries.

One reason I like Smurfit shares is that I’m bullish on the long-term prospects for the packaging sector due to the important role packaging plays in e-commerce. If you buy something large online these days, it’s almost certain to come in some kind of cardboard box, so packaging companies essentially offer an indirect way to profit from the increasing popularity of online retailers such as Amazon, Argos, and ASOS. The fact that SKG is focusing on 100% renewable products is another advantage, as that is clearly the direction the world is going in.

Smurfit Kappa has increased its dividend substantially in recent years and analysts expect another 7% hike for FY2018, taking the payout to €0.94, which equates to a healthy yield of 3.8% at the current share price. The stock has been sold off recently on the back of global recession fears, although I think the sell-off has been excessive. Trading on a P/E of 8.6, I see a lot of value on offer at present.

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 owns shares in St. James's Place. The Motley Fool UK has no position in any of the shares mentioned. 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

Arrow symbol glowing amid black arrow symbols on black background.
Investing Articles

Down 5%, Glencore’s share price looks a serious bargain to me now

Glencore’s share price looks undervalued to me, supported by strong earnings growth prospects and the potential resumption of extra shareholder…

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

I’d invest £6,580 in this FTSE 250 REIT for £500 passive income

This FTSE 250 renewable energy enterprise is on track to become a Dividend Aristocrat! Here’s how I’d invest to earn…

Read more »

Investing Articles

Buying 1,000 of some dividend shares today unlocks £45 in weekly passive income!

These shares are among the biggest dividend payers in the FTSE 100. Should investors be buying them now to earn…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

If I’d put £5k in index funds 5 years ago, here’s what I’d have now

Investing in index funds is an excellent way to grow wealth with minimal effort. But how much money can investors…

Read more »

Investing Articles

10.2% yield! 1 of the top income stocks to buy in July?

A 10% yield's pretty rare, but this firm's been growing shareholder payouts for nine years! Does that make it one…

Read more »

Investing Articles

‘FTSE 100 to skyrocket to 10,000’! 1 cheap stock I’d buy before the surge

Analyst forecasts predict a massive surge for the FTSE 100 may be coming by April 2025! Should investors snap up…

Read more »

Investing Articles

My Taylor Wimpey share price prediction for the second half of 2024

Having underperformed the FTSE 100 from January to June, our writer reckons the Taylor Wimpey share price might enjoy a…

Read more »

Investing Articles

£10k in savings? Here’s how I’d aim to turn it into a £4,894 annual passive income with Aviva shares

Aviva might be one of the FTSE 100's hottest dividend shares right now. I'm banking on it to provide me…

Read more »