I’m searching for some of the best dividend stocks to buy in August. Here are two top FTSE 100 with enormous dividend yields that have caught my attention.
Big defence dividends
Military spending in 2020 hit levels not seen since the late 1980s as the steady rise in geopolitical tensions continued. It’s possible that the economic impact of Covid-19 could harm weapons budgets in the short-to-medium term. But recent news flow concerning the global arms race doesn’t suggest that spending is about to cool. This bodes well for FTSE 100 arms builder BAE Systems (LSE: BA).
Last week, Russia unveiled its cutting-edge Checkmate stealth fighter, seen as a rival to the F-35 fighters used in the West. Further East, China is showing no signs of curtailing the investment in its own armed forces either.
And it’s thought to have hit major milestones in the construction of a new stealth jet of its own (the FC-31). Beijing’s military budget has soared 76% over the past decade, according to the Stockholm International Peace Research Institute.
It’s highly unlikely that arms spending in North America and Europe will moderate in this climate. Indeed, US president Biden recently submitted a $715bn budget request for defence for fiscal 2021 to modernise the military. Critically for BAE Systems too, future Stateside spending looks set to be focused on shipbuilding as Washington prepares for a potential conflict in the Pacific.
It’s perhaps no wonder that incoming orders at BAE Systems soared 13% in 2020 to £20.9bn. Order intake has exceeded expectations in more recent months too, according to May’s most recent trading update. Though bear in mind that any project development problems could affect future demand for its critical hardware.
I think this FTSE 100 share has terrific earnings visibility for the next decade at least, making it one of the best blue-chip stocks for me to buy. And a chunky 4.5% dividend yield puts the icing on the cake.
A FTSE 100 stock for the EV revolution
Dividend yields at Antofagasta (LSE: ANTO) might not be as impressive as those of BAE Systems. But at 4%, the copper miner’s forward figure still beats the broader FTSE 100 average by a full percentage point.
Not only do I think the commodity company’s a great way to play the economic recovery and the introduction of huge infrastructure stimulus spending. But I believe demand for the Footsie firm’s product will soar as investment in renewable energy infrastructure and electric vehicle sales both go from strength to strength.
Also take into account that a fully battery-powered electric vehicle contains between three and four times more copper than a conventional, combustion-engine-powered car.
Okay, the complexities of exploring for metal and then dragging it out of the ground creates no little risk for UK mining shares. But I think Antofagasta’s low valuation reflects this danger.
City analysts think earnings will rocket 169% year-on-year in 2021. This means the FTSE 100 firm trades on a forward price-to-earnings growth (PEG) ratio of 0.1. A reading below 1 suggests an equity could be undervalued by the market.