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6.4% dividend yields! Should I buy these FTSE 100 stocks right now?

Screen of price moves in the FTSE 100
Image source: Getty Images.

I’m searching for the best FTSE 100 dividend stocks to buy. And today, Vodafone Group (LSE: VOD) sits near the top of my shopping list.

The telecoms titan has a rich history of paying above-average dividends. This is thanks, in part, to its exceptional cash generation and its ultra-defensive operations. This gives it the confidence to keep doling out fatty cheques to its shareholders, whatever murkiness might be on the horizon.

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For the current financial year (to March 2022) the business carries a market-mashing 6.4% dividend yield based on analysts’ dividend forecasts.

It’s true that raising profits in highly-regulated industries like telecommunications can be difficult. But I think there’s still plenty to get excited about with Vodafone over a long time horizon. The global 5G rollout offers terrific earnings possibilities over the next several years at least. And the FTSE 100 firm’s exposure to fast-growing African emerging markets also excites me.

Another FTSE 100 big yielder

J Sainsbury (LSE: SBRY) is another FTSE 100 share whose dividend yield beats the broader UK blue-chip average. For the 12 months to February 2022, the supermarket’s yield sits at 3.8%. It’s a figure that beats the broader Footsie forward average by almost half a percentage point.

Sainsbury’s share price has taken off as speculation over a possible takeover has ignited. Takeover action in the UK is at its highest level in a decade and a half. And the supermarket sector is particularly awash with activity with Morrisons and Asda both currently subject to bids. It’s possible then that Sainsbury’s could keep rising in value.

I’m not interested in buying Sainsbury’s shares however. I buy UK stocks based on a long-term view and not because of the possibility of short-term share price gains. And the outlook for this FTSE 100 stock is packed with problems as competition in the grocery industry worsens and costs grow.

British retail stocks like these are famous for their ultra-thin margins. I fear things could get much worse for the established operators like this too, as discounters Aldi and Lidl and US internet giant Amazon step up their attacks.

A better dividend stock

I’d much rather spend my hard-earned cash on Royal Mail (LSE: RMG). This isn’t just because this FTSE 100 share’s 4% forward dividend yield hands down either. I think the relentless rise of e-commerce should drive the Royal Mail significantly higher over the long term.

Royal Mail plays a critical role in getting packages from retailers and manufacturers to individuals and businesses. And it doesn’t only deliver goods the length and breadth of the UK. Its GLS division operates logistics services across Europe and in the US.

This gives the Footsie firm exposure to Europe’s largest online shopping market and other rapidly-expanding e-commerce markets such as Italy, Spain and the Czech Republic.

Royal Mail is introducing new services (like door-to-door package collection) and investing heavily in parcel machines to make the most of this opportunity too. Competition from the likes of DPD and Hermes is intense, but I believe Royal Mail could still deliver mighty shareholder profits.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. 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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