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2 UK dividend stocks I’d add to my portfolio today

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Private investor buying UK shares at home
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Stock investments such as funds or individual shares can be roughly categorised into two types – growth and income. Investors can make strategic decisions about whether they want to keep their profits as income, or reinvest them to achieve more growth.

One of the most popular ways income investors try to generate a regular amount of money every month is by buying dividend stocks.

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Rather than making regular payouts to investors in the form of dividends, some companies choose to use the same capital to make further investments to contribute to the growth of the company and its share price.

While there is no right or wrong investment strategy to pursue, I like to look at dividend stocks that can supplement my regular income. Here are two FTSE 100 stocks I would buy for their strong dividend yields today.

National Grid

Many companies have either stalled or cut their dividend payouts since the start of the pandemic last year. Utilities company National Grid (LSE:NG.) was one of the few that was able to keep increasing its dividend due to the defensive nature of its business.

The company owns the electricity infrastructure that operates throughout all of England and Wales. This makes it a key component in the energy sector in the UK.

Based on National Grid’s current share price of 860p, the company’s dividend yield stands at 5.6%. That’s higher than the 4.8% average of all FTSE 100 constituents.

I see National Grid’s dividend yield as being one of the steadiest in the index, with management keen to continue growing its dividend whenever possible.

There is a risk to investing in National Grid, however. The share price growth has not been spectacular by any means.

The shares have been flat over the last six months. Over the last year, they have decreased in value by 17%. NG shares will need to see growth to make that attractive dividend yield work hard for investors.

Another risk to the investment is increasing scrutiny from energy regulator Ofgem. Most recently, Ofgem called for National Grid to be stripped of its role managing the UK’s electricity transmission network.

This regulatory action poses a constant threat to the National Grid share price. But for me the outlook is positive enough as a dividend investment if the payout growth continues.

GSK

Pharmaceutical giant GlaxoSmithKline (LSE:GSK) has seen its share price suffer as competitors Pfizer and AstraZeneca saw their Covid-19 vaccines approved towards the end of 2020. GSK says its own vaccine will be ready by the end of 2021, in collaboration with French drug giant Sanofi.

The share price has fallen 23% in the last year. It also slumped earlier this month as the company forecast earnings per share to decline in 2021.

However, I feel there is an opportunity to buy GSK shares today. While it may not have been the first pharma company to roll out a Covid-19 vaccine, demand for new jabs amid the emergence of new variants means the eventual arrival of GSK’s vaccine will be more than welcome.

With a dividend yield of 6.5%, the shares seem cheap to me as an income investment. The last year has shown how vital pharma companies are and I think that will continue to be the case for a long time.

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conorcoyle has no position in any of the shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. 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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