The Motley Fool

Build a second income stream with these 2 terrific FTSE 100 dividend stocks

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Twenty pound notes in back pocket of jeans
Image source: Getty Images.

I’ve spent a long time eulogising about Mondi (LSE: MNDI) down the years, but it’s quite possible that the packaging giant’s outlook is stronger now than it has been for a very, very long time.

I’ve spoken about the brilliant progress it is making to expand its facilities across Europe and Russia. I’ve discussed its improving opportunities to pass hefty input costs on to its clients. I’ve mentioned the growing supply shortage in the packaging market that Mondi is in great shape to capitalise on now and well into the next decade at least. And I’ve described how its ambitious approach to acquisitions should give earnings that little extra kick up the backside too.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

All of these positive factors were highlighted in the Footsie firm’s latest trading statement this month, an update in which it advised that revenues rose 4% during January-June to €3.73bn, and underlying operating profit jumped 25% to €630m.

Mondi’s forward P/E ratio of 13.9 times is far too cheap in light of these qualities. However, they are not the only reasons to invest today.

Dividend dynamo

As I alluded to last time out, Mondi’s excellent record of earnings growth has allowed dividends to swell at quite a rate, and to culminate in a maiden special dividend that was forked out in 2017.

Needless to say the company’s bright profits picture bodes well for later dividends — City forecasters are anticipating bottom-line increases of 15% in 2018 and 6% in 2019.

Current Square Mile forecasts are suggestive of a 72 cent payment this year, up from 2017’s 62 cent reward. And another significant dividend rise to 76 cents is predicted for 2019.

Subsequent yields of 3% and 3.2% respectively are healthy, but admittedly not game-changers. However, given that demand for Mondi’s products is ripping higher and likely to continue doing so, it looks as if shareholder payouts are only heading one way: to the stars.

Indeed, the rate at which the company is already raising them could help investors to build a considerable second income stream.

5% yields!

If you’re on the lookout for jumbo yields now, though, GlaxoSmithKline (LSE: GSK) should be of interest to you.

Sure, the pharmaceuticals colossus hasn’t been raising dividends like Mondi in recent times. Heck, due to the patent losses that have hampered earnings growth, allied with the huge costs associated with its operations, GlaxoSmithKline has been forced to keep the payout locked at 80p per share for the past several years.

City analysts are expecting dividends to remain flat through to the end of 2019 at least. There are two things to remember, though. As I said, yields are considerable, standing at 5% through to this period.

And secondly, earnings are expected to flip higher again from next year as its catalogue of new, market-leading products lights a fire under the top line, meaning that dividends should begin rising again sooner rather than later.

At its current share price, GlaxoSmithKline deals on a forward P/E ratio of 14.6 times. This is far too cheap in my opinion given the size (and quality) of its product pipeline, which I am confident should blast both profits and dividends skywards again over the next few years.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

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

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.