7%+ yields! 2 dividend shares I’d buy today

This Fool likes the look of these two dividend shares. If he had the cash, he’d add them to his holdings right now.

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Buying dividend shares has been key to my investment strategy in recent times.

In the past few years, we’ve seen inflation peak above 11%. And while it’s slowly coming back down closer to the government’s target, we’re still feeling the effects. That means I’ve had to make my cash work harder for me. As a result, I’ve turned to stocks that provide juicy yields.

With that in mind, I’ve been on the hunt for my next potential purchases. Here are two FTSE 100 shares I’d buy today if I had the cash.

Should you invest £1,000 in British American Tobacco right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if British American Tobacco made the list?

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British American Tobacco

Let’s start with British American Tobacco (LSE: BATS). After a difficult spell over the past couple of years, the stock is finally gaining momentum. Year to date, it has climbed 21.7%.

Created with Highcharts 11.4.3British American Tobacco P.l.c. PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Even after that rise, it still yields a monumental 8.3%. That’s the fourth-highest payout on the Footsie.

Dividends are never guaranteed. So, naturally, investors may be sceptical of high yields. However, what I like about British American Tobacco is that its management has reiterated its intention to keep giving back to loyal shareholders in the years to come.

For example, it recently announced a £700m share buyback scheme for 2024 and a £900m scheme for 2025.

The biggest threat to the business is the falling popularity of smoking. We’ve seen a rise in legislation being imposed on the industry. British American Tobacco also wrote down the value of its US brands earlier this year.

However, the business is adapting with its venture into the non-combustibles space, with which it has made solid ground. In its half-year results, it revealed that revenue from smokeless products now made up 17.9% of group revenue.

I’m also a fan of its cheap valuation, with the stock trading on just eight times forward earnings.

HSBC

Next on the list is HSBC (LSE: HSBA). The stock has been on a rollercoaster journey this year. After falling by over 8% in February following the release of its full-year results, its share price has made a strong recovery. Year to date it’s up 6.6%.

Created with Highcharts 11.4.3HSBC Holdings PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Like British American Tobacco, I’m most enticed by HSBC’s thumping 7.2% yield. That’s slightly lower than its Footsie counterpart. Nonetheless, it’s still the sixth-highest yield on the index.  

To go with that, this year the bank will pay a special one-off dividend after the sale of its Canadian business. Taking that into consideration, HSBC’s yield will sit closer to 10%.

I see a few threats. The largest is HSBC’s exposure to China. While the nation has posted incredible growth across the course of the past couple of decades, its economy has been flagging recently. That’s largely due to its weak property market, which HSBC is invested in.

But over the long run, I expect HSBC’s exposure to China and, more widely, Asia will pay off. The region is filled with a vast number of growth opportunities.

HSBC shares also look cheap. They currently trade on just 7.4 times earnings and have a price-to-book ratio of 0.8.

But there may be an even bigger investment opportunity that’s caught my eye:

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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.

HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco P.l.c. and 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.

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