I have to admit, I really like FTSE 100 dividend stocks. Not only do they reward me with a stable income over time, many of them also double up as growth stocks. Among these, there are three stocks I like in particular. With their 8%+ dividend yields, they assure me of positive real passive income at a time of high inflation.
FTSE 100 inflation-beating housebuilder
The first is the housebuilder Persimmon (LSE: PSN), which has a 10.6% dividend yield! The company has an optimistic outlook for the future, as house prices remain firm even after the withdrawal of government support offered during the pandemic. Its recent results have been good too.
There is a note of caution here, though. A big reason why its dividend yield looks so high is because of a huge 35% decrease in its share price over the past year. Since dividend yield is nothing but the dividend as a proportion of share price, it follows that as a stock’s price dips, its yield rises.
If its share price continues to fall, I would then be earning a passive income at the cost of my capital. Which might or might not be a net positive outcome for me. I do not think, however, that its share price will remain muted for much longer. At present, it is trading at levels much lower than those seen pre-pandemic. And this is despite its robust numbers.
For me, right now the Persimmon dividend yield is a great way to beat inflation which is expected to stay at 5%+ levels in the near future. And over time, I expect its share price to rise too. So I will stick with the FTSE 100 stock for now.
Miner with big dividend yield
Next, is the Anglo-Australian miner Rio Tinto (LSE: RIO), which has a massive dividend yield of almost 10% right now. Its share price has been up and down over the past year, for a host of reasons, but probably most significantly the downgraded forecast for commodity prices in 2022. Still, when I look back, some capital gains have still been made because of this investment.
And while there could be some correction in its numbers this year, that remains to be seen. The Russia-Ukraine war has meant disruption in metal supply, which could keep their prices elevated. One of Russia’s biggest exports is iron ore, which co-incidentally is also a big revenue generator for Rio Tinto. In any case, the company has paid good dividends for years now and I will continue to hold it for the long term.
Safe FTSE 100 stock
Last, I like Imperial Brands, the tobacco stock. I have written about it in another article today in detail, so I won’t get into too much detail here. But in a nutshell, the stock is a safe defensive, whose demand is steady even during slowdowns. And it has a long history of big dividends. Its current yield is 8.6%.
Its future is still in flux, as consumers move away from tobacco products since they pose health risks, but for the next 3-5 years, I expect it to continue to be a healthy investment for my portfolio. I have bought the stock.
