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Have £1,000 to invest? 2 FTSE 100 dividend stocks for 2018 and 2019… and the next few decades

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If you’re hunting across the FTSE 100 for possible dividend buys, it’s easy to be drawn in by the big yielders at the expense of solid, sustained payout growers.

I’ve been there myself. I was won over by the monster yields of cigarette giant Imperial Brands and electricity supplier SSE, for example, shares whose profits outlooks — for very different reasons — now look less than concrete. I’ve long since sold out of these shares.

When considering which income stocks to buy, it’s worth bearing in mind Aesop’s Fable of the tortoise and the hare. Sure, some Footsie giants may offer up brilliant yields now, but over a long time horizon, it is the smaller-yielding dividend growers that often prove the difference between a comfortable retirement or otherwise.

A financial favourite

Hargreaves Lansdown (LSE: HL) is one such share that could make investors a mint in the coming decades given the rate at which it is growing dividends — it hiked the total full-year dividend by 38% year-on-year in the period to June 2018, to give you a taster.

And it’s easy to see this trend continuing. The City certainly remains upbeat and broker consensus is suggestive of a 46.5p per share dividend in fiscal 2019, up from 40p last year and supported by a predicted 16% earnings uplift.

A subsequent yield of 2.1% is, as I suggested, hardly electric. Meanwhile Hargreaves Lansdown’s elevated forward P/E ratio of 37.7 times may put many investors off as well. Neither of these readings should deter savvy share pickers, however, given the exceptional profits opportunities that the financial services giant provides.

Because of the low interest rates currently on offer from traditional savings products like cash accounts, investors are becoming more active in managing their savings. This is reflected in the fact that inflows at Hargreaves Lansdown are growing by double-digit percentages, a trend that looks likely to continue as the Footsie firm invests in its product ranges and technologies.

The 6%+ yielder

The vast swathes of people becoming more and more careful to make sure they have enough to retire on is also something that promises to deliver brilliant profits growth at Legal & General Group (LSE: LGEN).

Whilst I am convinced that Hargreaves Lansdown is a brilliant share to buy, despite its low yield and high valuation, those seeking brilliant conventional value may be more tempted by LGEN. It carries a prospective earnings multiple of 8.6 times and monster dividend yields of 6.5% for 2018 and 6.9% for 2019, created by anticipated payouts of 16.4p and 17.5p per share respectively.

Legal & General has been no slouch in lifting dividends in recent years either, helped by a long run of strong earnings growth and mighty cash generation.

In less cheery news, the City is expecting the insurance colossus to break its impressive run of earnings expansion with a 4% drop in 2018 before returning to growth next year. Given that the company’s half-year results in August smashed past broker expectations though, a release in which it also advised “we expect to have an exceptionally busy second half,” I think profits and thus dividends could well surprise to the upside. And I’m not just referring to 2018’s results. I rate Legal  & General, like Hargreaves Lansdown, as excellent income shares to buy today and to hold in the years ahead.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown and Imperial Brands. 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.