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Should you buy this FTSE 100 dividend stock or this 7% yielder?

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For those seeing reliable dividend growth year after year I think National Grid (LSE: NG) could be considered a ‘must-have’ stock.

Owing to its colossal capital expenditure — keeping the country’s electricity grid can’t be done on the cheap, of course — the FTSE 100 business isn’t immune to the occasional earnings slip. Indeed, a 1% drop is forecast by the City for the year ending March 2019.

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Still, the reliable nature of energy demand means that National Grid can look forward to solid earnings growth over a longer-term time horizon. To illustrate this point, the company is expected to roar back with an 8% bottom-line improvement in fiscal 2020. And this solid outlook, allied with its supreme cash flows, gives rise to expectations that its progressive dividend policy has much further to run.

Last year’s predicted 45.6p per share payment is anticipated to rise to 47p this year and to 48.3p next year. This means yields clock in at a formidable 5.5% and 5.7% for fiscal 2019 and 2020, respectively.

The fairest of them all?

Investors on the hunt for chunky dividends should also give Trinity Mirror (LSE: TNI) more than a cursory glance.

Brokers have been busy upgrading their earnings forecasts in recent weeks and, where a fractional earnings dip had been estimated for 2018, the City is now predicting a 1% profits rise instead. In addition, the tiny earnings upswing anticipated for next year has also received a shot in the arm and a meatier 7% advance is now likely, or so say the number crunchers.

These plumper estimates aren’t a surprise given that Trinity Mirror’s switch from print to digital publishing continues to power along nicely.

The London company announced this week that an 11% fall in like-for-like publishing print revenue between January 1 and April 29 caused comparable sales across its Publishing arm to drop 9% in the period. However, a 2% uptick in like-for-like digital publishing sales shows that the massive investment Trinity Mirror has made in digitalising the business is paying off.

And the acquisition of the Express and Star newspapers from Northern & Shell — should the deal sail past the scrutiny of the Competition and Markets Authority, of course — promises to give digital revenues another hefty shove. Like-for-like digital sales across these publishing assets leapt 40% year-on-year in the period ending April 29.

Those 7% + yields!

The good news for income chasers is that this bubbly earnings outlook, aligned with Trinity Mirror’s exceptional cash flows, is expected to keep propelling dividends skywards as well.

A 6.1p per share reward is predicted for 2018, up from 5.8p last year, and a 6.3p payment forecast for 2019. These figures create jumbo forward yields of 7.1% and 7.4%, respectively. Such projections are also looking pretty robust as well because they are covered by expected earnings around 6 times through to the conclusion of next year.

As my Foolish colleague Ian Pierce recently pointed out, the fall of the print market still casts a pall over the publishing giant’s profits outlook. But I would argue that a forward P/E ratio of 2.4 times more that factors in the threat created by this segment.

All things considered, I reckon Trinity Mirror, like National Grid (which also trades on a cheap forward P/E ratio of 14.7 times), is a white-hot dividend pick right now.

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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.

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