With 7%+ yields, which of these FTSE 100 dividend stocks should I buy?

When the Footsie’s packed with high-yield dividend stocks, how can we decide which ones to buy next? I’d like to own all three of these.

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Sometimes, just one FTSE 100 sector can dominate the list of high-yield dividend stocks. But right now, I see top yields from a wide range of firms.

With such choice, picking the best to buy is tricky. But today, I want to look at three I have on my shortlist, and at how I’ll decide.

They’re three very different businesses… insurance, telecoms and tobacco.

Legal & General (LSE: LGEN) is my insurance pick right now, with its forecast 8.2% yield. The share price has bounced back since Covid, but it’s still down over five years.

Broker forecasts show the dividend rising, with earnings growing to cover it, so that yield looks strong to me.

I’ve always liked insurance stocks, and I’ve owned Legal & General in the past. Right now, I hold some Aviva shares. And the rocky ride I’ve had with those shows how volatile this cyclical sector can be.

I think that’s the big risk. Insurance shares can get overheated in bullish times, and fall too far when the bears are out and about.

How do I rate the stability of the dividend in the coming years, compared to other Footsie sectors? That will be the key point behind my decision.

British American Tobacco

Next is a pure consumer choice. It’s British American Tobacco (LSE: BATS), on a forecast yield of 9.8%. We’ve seen an even tougher five years for the share price this time.

The difficulty with this stock is, I think, fairly clear. It’s a cash cow that’s generating oodles of profits, which mean fat dividends. But for how much longer?

Tobacco is on the way out, right? Well, a lot of the world doesn’t seem to think so. And British American is a leader in alternatives to smoking the stuff.

So will it last long enough for the dividend to make me a good enough gain? I think so. But do I need to take that risk when there are others I rate as safer? That’s the big question.

BT Group

For years I’ve shunned BT Group (LSE: BT.A). We just don’t buy shares in companies carrying such huge debt, do we? And the share price slide seemed to bear that out.

But sometimes I sit back and wonder if I overthink things a bit. It’s easy to do when we analyse stocks, isn’t it?

Despite the debt, BT has been a dividend machine for years. It was hit during the pandemic, but quickly came back.

We’re looking at less in cash terms now, but the share price means the forecast yield is up at 7.4%. And BT makes dividends a priority. So if it can just keep paying out the cash, why not just sit back and take it?

That theory could fall apart if BT goes the way of Vodafone, decides it needs a shakeup, and slashes the dividend. And debt is always a risk.

Which one then?

I probably shouldn’t buy another insurance stock, and should diversify a bit more first. But I think Legal & General is my choice of these three — and it’s definitely a candidate for my next buy.

The other two are staying on my list though.

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.

Alan Oscroft has positions in Aviva Plc. The Motley Fool UK has recommended British American Tobacco P.l.c. 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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