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Have £1,000 to invest in August? Here are three FTSE 100 dividend stocks to consider

If you’ve found you have a little bit of money left over this month, you’re probably tempted to spend it. However, a more sensible idea might be to invest it, in order to set yourself up for the future. Investing in dividend stocks is one strategy that could be worth considering. With these you can build yourself a second income stream, which could put you on the path to financial independence. Here are three FTSE 100 dividend stocks that could be worth a look at right now.

Unilever

If you’re unfamiliar with the name Unilever (LSE: ULVR) I can almost guarantee you’re familiar with, and probably use, many of its products. That’s because the consumer goods giant owns a world-class portfolio of popular food, drink, home care and personal care brands, present in 98% of UK households.

At 3.1%, Unilever doesn’t have the highest dividend yield in the FTSE 100. The dividend is also declared in euros, which means there’s currency risk for UK investors. However, the group does have a fantastic track record of consistently paying a dividend as well as increasing the payout on a regular basis.

The shares currently trade on a forward P/E of 21.7 which is by no means a bargain. But with Unilever you get consistency, reliability, protection from trade wars, as well as a growth story provided by the group’s exposure to the world’s emerging markets.

WPP

For a higher yield, it could be worth checking out the world’s largest advertising company WPP (LSE:WPP). Its shares currently sport a prospective dividend yield of 4.6% and the company has a fantastic long-term dividend track record.

Sentiment towards WPP hasn’t exactly been high over the last 18 months. Conditions in the advertising industry have remained challenging and influential CEO Martin Sorrell also stepped down recently following allegations of personal misconduct.

Yet after a 30% share price fall in 18 months, WPP could offer turnaround potential. Like Unilever, WPP has considerable exposure to the world’s fast-growing emerging markets. Just recently, the group announced that it was increasing its investments in India in order to capitalise on the ‘explosion’ of mobile marketing and media consumption in this region. With analysts upgrading their forecasts for the stock, and the P/E a low 11.1, I think now could be a good time to take a closer look at the ad giant.

International Consolidated Airlines

Lastly, check out British Airways owner International Consolidated Airlines (LSE: IAG), which currently yields around 3.7%.

IAG certainly isn’t what I’d call the ‘perfect’ dividend stock. For starters, UK investors have to pay a Spanish withholding tax of 19% on their dividends. Secondly, as with ULVR, the divi is declared in euros, so there’s FX risk. Thirdly, the airline industry is extremely capital intensive, meaning that it can be hard for companies in this sector to consistently reward investors with dividends throughout the business cycle.

Yet looking beyond these issues, there are attractions to IAG’s dividend. For instance, the payout has grown at a formidable pace in recent years (three-year growth of 170%), and looks set for further big growth this year and next. Furthermore, dividend coverage is very high, meaning the payout looks sustainable. The stock is also very cheap on a forward P/E of 6.9. Overall, I think the risk/reward profile here looks attractive.

Buy-And-Hold Investing

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Edward Sheldon owns shares in Unilever and WPP. The Motley Fool UK owns shares of and has recommended Unilever. 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.