If you’re looking for dividend stocks for a starter ISA, there are plenty of blue-chip options in the FTSE 100 right now.
However, investors need to be careful where they’re looking for income. Over the past few weeks, some of the index’s top income stocks have cut their dividends to conserve cash in the coronavirus outbreak.
With that in mind, here are three FTSE 100 dividend stocks I’d buy today for a starter ISA.
FTSE 100 dividend stocks
Insurance and pension savings giant Aviva (LSE: AV) is one of the FTSE 100’s top dividend stocks.
It does not look as if this is going to change any time soon. According to a recent trading update, the company’s solvency position is 175%. That’s including the payment of the final dividend for the year. Overall, the business has £2.4bn of excess cash.
While it is too early to tell what impact the coronavirus outbreak will have on the business, management seems confident that the corporation can weather the storm. Aviva’s decision to pay its final dividend is notable when so many other companies have cancelled the payouts.
As such, now could be a great time to snap up a share of this dividend stock a bargain price. It is currently dealing at a price-to-earnings (P/E) ratio of just 5. On top of this, the shares yield 12%.
That’s why Aviva stands out as one of the FTSE 100’s top dividend stocks.
Asset management giant
Another one of the FTSE 100’s top dividend stocks I’d buy today is Legal & General Group (LSE: LGEN).
As one of the largest asset and pension managers in the world, Legal’s size should help it pull through the current economic and market uncertainty relatively unscathed.
So far, management has not commented on the group’s dividend sustainability. Nevertheless, the company reported a solvency ratio of 184% at the end of 2019, with £1.6bn of surplus cash.
Most of Legal’s income comes from asset and pension management fees. So it has a steady income stream to fund operations.
This suggests that the company’s dividend is not only secure but could return to growth next year when the economy recovers.
Therefore, now could be an excellent time to buy the stock. It currently supports a dividend yield of nearly 10%. On top of this, the shares look dirt cheap. They’re dealing at a P/E of just 6. As dividend stocks go, this business looks highly attractive.
Unique business
Not all FTSE 100 dividend stocks are created equal. Phoenix Group (LSE: PHNX) for example, has a complex and uncommon business model.
The largest closed life insurance and pension fund consolidator in Europe profits by managing pension funds and buying life insurance policies on the cheap.
This provides the business with a steady stream of predictable income. The virus outbreak might have shut down large sections of the global economy, but pensions still need to be managed.
Indeed, management has made the most of the opportunity offered by the recent decline in the share price by splashing out on shares in the business.
Managers have spent nearly £250,000 buying stock in Phoenix over the past few weeks.
These actions suggest that management believes Phoenix is a good investment at current levels. With a dividend yield of 7.6% on offer, it’s no surprise that insiders have been rushing to buy this FTSE 100 dividend champion.
