£10k to invest? 2 FTSE 100 dividend stocks that have caught my eye!

I’m searching for the best FTSE 100 dividend stocks to buy in April. Here are two whose terrific all-round cheapness has grabbed my attention.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The FTSE 100 has roared back into life as confidence across financial markets have improved. Britain’s blue-chip index is now trading just below one-month highs and is 8% off the lows struck earlier in March. Fresh volatility could be around the corner but I’ll still be looking for top FTSE 100 dividend stocks to buy.

Here are two income stocks whose dividend yields have caught my eye today. Each carries a reading that batters the 3.5% forward average of FTSE 100 index.

BP

A near-60% rise in the benchmark Brent oil price has helped the BP (LSE: BP) share price shoot through the roof in 2022. Crushing crude prices have helped boost profits at the oil majors and more strength could be possible as the tragic events in Ukraine (and the subsequent sanctions slapped on Russia) disrupt energy supplies.

Yet despite recent strength, BP’s share price still looks mightily cheap on paper. Not only does the company trade on a forward price-to-earnings ratio of 6.1 times, this FTSE 100 dividend stock boasts a meaty 4.4% yield as well.

Am I tempted to buy BP’s shares then? The answer is a resounding no. It’s my opinion that oil prices have surged beyond what the supply/demand picture suggests they should be. And I think a sharp correction could be around the corner.

Soaring inflation, the war in Ukraine, and rocketing Covid-19 cases in China all threaten the global economy and with it the outlook for oil demand. The situation could get even worse too if a breakthrough comes concerning Iran’s nuclear deal and heaps of new oil enters the market.

I’m also worried about BP’s prospects as the world gravitates away from fossil fuels and towards renewable energy stocks. The FTSE firm has invested large sums to beef up its green energy options. But it still has a long way to go to offset waning oil demand and protect its long-term future.

HSBC Holdings

I don’t need to take a risk with BP when there are so many other cheap stocks to choose from, anyway. Take banking giant HSBC Holdings (LSE: HSBA) as an example. This FTSE 100 dividend stock trades on a rock-bottom P/E ratio of 9.9 times for 2022. Meanwhile its forward dividend yield sits at a healthy 4.2%.

HSBC faces the same threat of declining revenues as the global economic recovery slows. This is particularly so because of its dependence on the current coronavirus hotspot of China. However, this is a risk I’d be happy to accept given its excellent value right now.

Besides, the long-term outlook here remains robust with disposable incomes and population levels in Asia still tipped to grow strongly in the years ahead. With financial product penetration rates here at low levels, there is a world of sales opportunities for HSBC and similar firms to exploit. Analysts at McKinsey & Company believe personal financial assets in Asia will account for two-thirds of the global total by 2025.

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.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended HSBC Holdings. 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.

More on Investing Articles

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »