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.

| 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.

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’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.


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.

More on Investing Articles

Newspaper and direction sign with investment options
Investing Articles

When cheap markets meet favourable conditions, sentiment flips very quickly

London’s stock market is cheap — some sectors, even cheaper. Given a change in sentiment, the uprating could be substantial.

Read more »

Investing Articles

Empty Stocks and Shares ISA? I’d snap up these 3 stocks to start with!

Sumayya Mansoor explains how she would start to build wealth from scratch with an empty Stocks and Shares ISA and…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

7.7% yield and going cheap! Why is this unknown FTSE 250 stock flying?

It's no household name, but there's one FTSE 250 stock with a high dividend yield and booming profits that looks…

Read more »

Photo of a man going through financial problems
Investing Articles

I’d stop staring at the Nvidia share price and buy this FTSE 100 stock instead

This writer reckons there is a smarter way to invest in Nvidia today without taking on stock-specific risk. Here is…

Read more »

Young lady working from home office during coronavirus pandemic.
Top Stocks

5 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Young Asian man drinking coffee at home and looking at his phone
Dividend Shares

These 3 FTSE 250 stocks offer me the highest dividend yields, but should I buy?

Jon Smith considers FTSE 250 shares with a very high yield, but questions whether the income is going to be…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Is FTSE 100 takeover target DS Smith a great buy?

A mega-merger between FTSE 100 giants DS Smith and Mondi has the City abuzz. But is there any value in…

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

The WPP share price dips as profits fall. Here’s why it could be a top dividend buy

I'm starting to think the WPP share price undervalues the stock, especially if the long-term dividend outlook comes good.

Read more »