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Have £2,000 to invest? These 2 FTSE 100 6% dividend bargains could help you put it to work

Mining giant BHP Billiton (LSE: BLT) is mighty in the world of metals and minerals, a FTSE 100 stalwart with a market capitalisation of more than £82bn. It’s one of the biggest resources companies in the world, with global headquarters in Melbourne, Australia, but listed on the London index.

Iron in the soul

BHP is also heavily diversified, with copper, iron ore, coal, zinc, nickel and potash assets across Australia and the Americas, as well as oil exploration and development units in the US, Australia and Trinidad & Tobago.

The group is also operating in a famously cyclical sector, as demand for metals and minerals rotate along with the business cycle. Growth has been driven by China for the last couple of decades but there are signs that its economic miracle is finally hitting reality, and this will hit the mining sector’s number one source of demand.

Heavy metals

Recent global stock market volatility has also had an impact, with the BHP Billiton share price down 13% in three months. However, as with most cyclical investments, the time to invest is when they’re down. Currently, BHP Billiton trades at a valuation of 11.1 times forecast earnings, comfortably below the 15 times seen as fair value.

That partly reflects the fact that growth is likely to slow. Company earnings rose 33% in the year to 30 June, but that’s forecast to drop to just 5% this financial year. If the global economy slips into recession next year, as some suggest, earnings could slow further.

You can wait and see if stock markets fall further, and time your purchase then. However, you will never buy a stock right at the bottom of the market. The other buying attraction for me today is that you can grab a whopping forecast yield of 6.5%, with cover of 1.5.

On your Marks

You could spread your risk by investing the other half of your £2,000 in UK high street fixture Marks & Spencer Group (LSE: MKS). This stock is also trading on a massive yield, in this case 6.3% and again, with cover of 1.5.

As you surely know, M&S has been struggling for ages. While BHP Billiton’s stock is up 45% over three years, Marks is down 42% over the same period. It has lost more than half its value since peaking at 596p in May 2015, trading at just 296p today. You won’t be surprised to hear many people have given up on it as a result.

Wage growth

Again, it’s in bargain territory, trading at 11 times earnings. The group’s troubles may have further to run, with earnings expected to drop 6% this financial year, then hold flat next year. It’s a brave investor who ventures onto the UK high street these days, although things could pick up with wages finally rising faster than inflation, up 3.1%, against 2.2% for CPI. Some kind of Brexit deal would also help.

Even if we get one, online competition isn’t going to disappear. Worse, M&S Clothing & Home lost its way years ago. Thankfully, it still has its Food, glorious food division. The income level is tasty, but of the two, I would plump for BHP Billiton.

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harveyj 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.