2 FTSE 100 dividend stars I’d buy now!

Jon Smith runs over two FTSE 100 dividend stocks that he thinks haven’t gained as much attention for their payouts as some other index stars.

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Over the course of the past few months, dividend stocks have been in focus. This has partly been due to rising dividend yields, but also because of high inflation. In my opinion, a lot of focus has been on FTSE 100 dividend stars from the mining and commodity space. Given the generous yields on offer, it’s easy to see why. However, I think there are some other strong players that have slipped under the dividends radar and that I’m keen to buy now.

A growth stock with income potential

The first FTSE 100 dividend stock is Royal Mail (LSE:RMG). I’ve written about the company before, but focused on the share price growth. In fact, even though the stock price is down 11% over the past year, it’s up an impressive 128% over two years. 

With the business enjoying a strong 2021 due to the pandemic, with lockdowns seeing more online ordering and deliveries. It also managed to hold its position in the market, despite tough competition from rivals. Although the momentum is returning now to a pre-pandemic baseline, I still think the business has built up enough positivity to leave the pandemic in a much stronger position than where it started.

Part of this is reflected by the dividend payments. The business had cut the dividend briefly during the pandemic, but now it’s back and enjoys a dividend yield of 3.96%. Personally, I think this makes the stock appealing. Not only can I pick up income, but if the share price moves higher in coming years then my ending profits will be in excess of just the current dividend yield.

However, I do need to be aware that the dividends aren’t guaranteed. Unlike some other FTSE 100 dividend picks, Royal Mail has cut the dividend before, so it could happen again. Further, pressure could be on the dividend due to the thin profit margins that the business works off. 

FTSE 100 dividends from property income

The second company I think has gone under the radar for income is Land Securities Group (LSE:LAND). It currently has a dividend yield of 4.16%, with the share price up almost 25% over the past year.

It’s the largest commercial development and investment company in the UK. Some of the plots include Xscape in Yorkshire, the Ibis at London Heathrow and some prime central London buildings.

LAND is classified as a Real Estate Investment Trust (REIT), which means that it needs to pay out a certain amount of income to investors as dividends to achieve favorable tax status. This means that the dividends should be consistent and reliable.

I think the FTSE 100 stock has gone under the radar since the start of the pandemic. A fall in rental income spooked investors in 2020, as well as the announcement that the company would selling off a chunk of assets due to the pandemic impact. The negative impact of footfall is still a risk I see, but the latest results show that the financials are bouncing back. Profit before tax for the six months to the end September was £275m versus a loss of £835m from the same period the previous year.

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.

Jon Smith has no position in any share mentioned. The Motley Fool UK has recommended Landsec. 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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