I’m searching for the best FTSE 100 dividend stocks to boost my long-term passive income. So which, if any, of these high-yield UK shares should I buy in 2023?
NatWest Group
The NatWest Group (LSE:NWG) share price has soared during the past three months. Yet at current levels the FTSE 100 bank still offers excellent all-round value, at least on paper.
The company offers a 5.5% dividend yield for 2023. And it trades on a forward price-to-earnings (P/E) ratio of 6.5 times.
Higher rates could give the bank’s profits a big boost in 2023. City analysts think the Bank of England will raise its benchmark a further 0.75% or 1% to peaks above 4% this year.
This would enable NatWest to make better profits from its lending activities. But I’m not tempted to buy the bank’s shares in 2023. This is chiefly because it could face a tidal wave of bad loans as the UK economy splutters.
Bank of England data last week showed that lenders expect a sharp rise in secured loan defaults to households in the next three months. A net score of 44.3 lenders is up significantly from 13.9 previously recorded for the first quarter of 2022.
NatWest could face prolonged profits pressure too, if the UK endures a long recession. Structural problems in the domestic economy could weigh on GDP long into the future. Established banks like this also face depressed revenues growth as digital and challenger banks raise their game.
Glencore
On balance I’d rather buy FTSE 100 dividend stock Glencore (LSE:GLEN) for my investment portfolio.
Commodities businesses like this also expose investors to risk in 2023. More specifically, profits at mining companies are in danger due to high Covid-19 cases in China.
The country’s economy grew just 3% in 2022 due to pandemic-related lockdowns. This was down sharply from 8% the year before. Lockdowns have been eased more recently, though a sudden re-tightening could be possible if infections balloon again.
Yet as a long-term investor I still think Glencore shares are very attractive. And I believe that their excellent all-round value makes them a top investment. The business trades on a forward P/E ratio of just 6.2 times and carries an 8.3% dividend yield.
You see I expect Glencore’s share price to soar as the commodities supercycle speeds up. The business sells and markets a wide array of industrial metals and energy products. This gives it exposure to multiple high-growth sectors like renewable energy, construction and consumer electronics.
Take copper, a major profits driver for the FTSE 100 firm. Analysts at Goldman Sachs think there will be a red metal supply gap of 8.2m tonnes by 2030 due to soaring demand and weak mine development.
The same supply and demand imbalances look probable for many of Glencore’s other markets too. And I believe this could propel company earnings — and by extension shareholder returns — sharply higher.
