2 FTSE 100 dividend stocks with yields over 6% I’d buy today

These two FTSE 100 (INDEXFTSE:UKX) stocks could deliver high income returns in my opinion.

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While the FTSE 100’s dividend yield of 4.6% may be highly attractive at the present time when compared to its historic range, it is possible to generate a significantly higher income return from a number of its members.

In fact, you can build a portfolio that includes a diverse range of stocks which together have an average dividend yield of around 6%.

With that in mind, here are two FTSE 100 income stocks that currently have dividend yields of 6% or above. Buying them now could prove to be a shrewd move, with their valuations suggesting that capital growth potential may also be on offer over the long run.

Imperial Brands

With a dividend yield of 10.7%, Imperial Brands (LSE: IMB) offers over twice the income return of the FTSE 100. The company has a long track record of above-inflation dividend growth, with it expected to raise shareholder payouts by 7.8% in the current year. Since its tobacco brands provide it with significant pricing power, its profitability is likely to move higher over the medium term. This could fund continued dividend growth for its investors.

The company also appears to have a growth opportunity within the new product space. E-cigarettes have proved popular among smokers, while a host of new products could likewise eventually replace demand for cigarettes. Although this journey may not be frictionless, it could lead to greater sustainability for the company.

With Imperial Brands currently trading on a price-to-earnings (P/E) ratio of 6.8, it seems to offer excellent value for money. Although regulatory risks may be high, this has often been the case for tobacco companies in recent decades. As such, from a risk/reward perspective, the stock seems to offer strong income investing appeal.

Landsec

Real estate investment trust (REIT) Landsec (LSE:LAND) appears to offer a favourable income and value investing outlook. The commercial property business currently has a dividend yield of 6%, while its price-to-book (P/B) ratio is just 0.6.

This indicates that investors have a pessimistic outlook regarding its future prospects. This is not a major surprise, since Brexit and the political and economic uncertainty it could bring may hold back property prices, as well as demand for a variety of uses. As such, the wider commercial property sector may experience a challenging period that leads to modest capital growth over the short run.

However, Landsec has a diverse and high-quality portfolio of property that, over the long run, is likely to increase in value. Its increasing focus on London may help to insulate it from wider UK economic challenges, although the UK economy is continuing to grow at a faster pace than had previously been expected during the Brexit process.

As such, now could be a good time to generate a passive income, as well as possible capital growth in the long run, from buying shares in the business while its valuation appears to be exceptionally low.

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.

Peter Stephens owns shares of Imperial Brands and Landsec. The Motley Fool UK has recommended Imperial Brands and Landsec. 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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