2 FTSE 100 stocks to buy for September

Here are two of my favourite FTSE 100 stocks I’d buy for September. I take a closer look at each company in detail and what’s driving them.

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These two FTSE 100 stocks are cheap right now and they also have attractive dividend yields of over 8%. So if I bought today, I wouldn’t be overpaying and the income payments are generous as well. Here’s why I’d buy these two companies for September.

#1 – Persimmon

Persimmon (LSE: PSN) reported its half-year numbers earlier this month. In a nutshell, the results were strong. Both revenue and profits improved by a significant amount during the six-month period.

In fact, the housebuilder is trading ahead of its pre-pandemic levels. So far, it has emerged from the coronavirus crisis in a stronger position. The number of new house completions almost doubled compared to last year. And its new housing operating margin improved by 1% to 27.6%.

Even the outlook seems promising. The company has strong forward sales, which have increased from its 2019 levels. But it also reckons that it can deliver approximately 10% growth in sales completions this year.

The housing market still appears to be buoyant. Interest rates are low, and I don’t think these will increase any time soon. Mortgage availability is still good and loans are cheap right now. This should help the FTSE 100 stock push higher.

The company is facing inflationary pressures, including rising building costs. So far, it has managed to absorb the price increases. But I question how long will it be able to to take this pressure.

Things are currently okay as the housing market is ticking along nicely. If this turns the other way, these costs could eat into the company’s profits and thereby impact the shares.

But I can’t ignore the cheap current P/E of 13x. It also has a dividend yield of over 8%. Hence, I’d buy.

#2 – Imperial Brands

Another FTSE 100 stock I’d buy for September is Imperial Brands (LSE: IMB). It’s not the most exciting of businesses but it generates strong cash flow to pay out the income. It’s a steady dividend-payer and I expect the company to tick along and generate modest growth.

The shares are currently trading on a P/E of 6x. This is dirt-cheap and it also has a very attractive dividend yield of almost 9%.

The recent interim results were strong. The board announced a five-year strategic plan in January to improve the company. Of course, it’s too early to assess if it’s working. So I’ll be watching closely for the next update.

What I like, it that the management team also managed to reduced debt by over £3bn on a 12-month basis. This was helped by a business disposal, but it’s encouraging to see that the firm is deleveraging and improving its balance sheet.

The key risk with this FTSE 100 stock is the increase in regulation regarding nicotine products. I expect this will increase over time as everyone is aware of the health issues relating to smoking. This could dampen future profits and could also impact the share price.

But Imperial Brands is focusing on growing its New Generation Products or NGPs. This offers the firm a future growth opportunity. Hence I’d buy.

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.

Nadai Yaqub has no position in any of the shares mentioned. The Motley Fool UK has recommended Imperial Brands. 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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