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2 FTSE 100 dividend stocks I’d buy with £3,000 today

Those seeking delicious and dependable income stocks need to look closely at Britain’s legion of housebuilders.

Conditions in the housing market have been at their most difficult since the global recession of a decade ago, with the slowing domestic economy casting a pall over affordability for first-time buyers and thus broader homes demand.

Despite this toughening climate, construction giants such as Persimmon (LSE: PSN) continue to make splendid progress. And this can be attributed to the country’s woefully-inadequate housing stock, a problem that has worsened as economic and political uncertainty has caused existing homeowners to think twice before placing their properties on the market.

This in turn has played into the hands of the likes of Persimmon, of course, as prospective owners have instead gone hunting for new builds. Illustrating this trend, the FTSE 100 business declared last month than the number of completions leapt to 16,043 units in 2017, up 6% year-on-year.

This drove revenues 9% higher last year, to £3.42bn. And business continues to boom, Persimmon advising that “healthy customer demand for new homes through the autumn sales season” helped forward sales to leap 10% as of December 31, to £1.36bn.

Eye-popping yields

So you shouldn’t be shocked that City brokers are expecting earnings at Persimmon to continue their relentless northwards march, and expansions of 5% and 3% are forecast for 2018 and 2019, respectively, are forecast.

This marks a significant slowdown from recent years, as profits had grown at a compound annual growth rate of 25.4% in the four fiscal periods ending 2016. A 21% advance is predicted for last year. However, Persimmon’s ability to keep grinding out profits growth — allied with its exceptional cash generation — is still expected to keep dividends swelling.

An estimated 135p per share payment for 2017 is anticipated to step up to 135.4p in the present year, and again to 139.6p in 2019. As a result, Persimmon sports massive yields of 5.7% and 5.8% for these prospective periods.

The chronic housing shortage, along with ultra-supportive mortgage rates, would both appear to be here to stay for some time longer, and as a result the earnings — and thus dividend — outlook for Persimmon remains compelling. The share is not without risk, but I believe this is more than reflected in its cut-price forward P/E ratio of 9.1 times.

Another income hero

RELX Group (LSE: RELX) is Footsie-quoted share which, thanks to predictions of further bulky profits expansion, is expected to keep growing dividends at a sprightly pace too.

Supported by a 6% bottom-line improvement in 2018, a 43.1p per share payment is predicted by the Square Mile, up from the anticipated 39.8p dividend of 2017. And for 2019, a 45.9p reward is forecast, meaning the yield improves to 3.1%, from 2.9% in the current period.

Clearly these yields aren’t the biggest Britain’s blue chips have to offer. But thanks to RELX’s commitment to product development and geographic expansion (helped by selective bolt-on acquisitions like that of California-based ThreatMetrix last month), I am confident dividends should continue growing strongly along with earnings.

Besides, investors can bask in RELX’s exceptional dividend cover through to the end of next year, which sits bang on the accepted safety watermark of 2 times.

I believe investors should look past the information and analytics specialist’s slightly-lofty forward P/E ratio of 17.2 times and consider snapping it up today.

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