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

These FTSE 100 (LON:INDEXFTSE:UKX) dividend growth stocks look too cheap to pass up, argues this Fool.

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Right now, income investors are spoilt for choice when it comes to buying blue-chip income. Indeed, at the time of writing the FTSE 100 as a whole supports an average dividend yield of 4.5%, which is significantly more than the 1.5% on offer from the highest-yielding savings account on the market today, according to my research.

With this being the case, today I’m going to highlight three FTSE 100 stocks that I believe currently offer once-in-a-lifetime yields.

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Turnaround complete

The first company is FTSE 100 insurance group RSA (LSE: RSA). Investors have been giving this business a wide berth since 2013 when the group ran into trouble, losing £347m in that year alone and forcing management to act quickly to stem losses. 

After five years of restructuring, the business now looks as if it has finally recovered from past mistakes. For 2019, analysts are expecting earnings per share to rise a staggering 37%. They’ve also pencilled in a 36% increase in the dividend payout, which will give an estimated yield of 5.1% according to current projections. Not only is this the highest distribution the company has offered since the financial crisis, but its valuation is also extremely attractive compared to history.

What’s more, shares in RSA are currently dealing at a forward P/E of 12.4 compared to the five-year average of around 15.

Flying high

My next dirt-cheap income play is International Consolidated Airlines Group (LSE: IAG). A quick look at this business will quickly tell its shares are extremely undervalued at current levels.

Over the past 12 months, shares in IAG have declined by around 34% and after this slump, are dealing at a forward P/E of 4.6. However, the company’s fundamentals do not support this decline. City analysts are expecting earnings per share to rise from €1.16 to €1.20 by 2020.

Analysts reckon the company will increase its dividend to investors as well during this period. The City has the stock yielding 6.2% in 2019, and with the distribution covered 3.4 times by earnings per share, it doesn’t look to me as if this payout will come under pressure anytime soon.

With the stock trading at a discount of around 50% to its 10-year average P/E, and supporting the highest dividend yield since 2009, I reckon now could be the time to snap up shares in IAG on the cheap.

Growing market

My final FTSE 100 income play is global cruise operator Carnival (LSE: CCL). There is plenty to like about this business. As I have pointed out before, one of the main reasons why I am bullish on this company is because the demand for cruises is growing steadily around the world, and is forecast to continue doing so for many years to come.

As the operator of the biggest fleet of cruise ships in the world, Carnival is exceptionally well placed to profit from this trend. But the market seems to be overlooking this factor. Right now, the stock is trading at its lowest valuation in 10 years, even though earnings have nearly tripled in the past six.

On top of this, the stock supports a dividend yield of 4.1%, which is the highest yield offered by the shares since 2014. The distribution is covered twice by earnings per share. All of the above leads me to conclude that Carnival is another bargain income stock that’s worth adding to your portfolio today.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Carnival. 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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