The Motley Fool

3 FTSE 100 dividend stocks I’d buy for 2019

Image source: Getty Images.

As we head into Christmas and the New Year, my investing thoughts are turning to 2019. There’s still a lot of political uncertainty about Brexit. There are also economic risks further afield.

Today, I want to look at three high-yield dividend stocks which I expect to continue providing a reliable income in 2019 and beyond.

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...

A cash machine

Even after the recent sell off, there aren’t that many FTSE 100 stocks offering a 7.3% dividend yield, generously covered by free cash flow. But that’s the deal on the table for investors in British American Tobacco (LSE: BATS).

The BAT share price has fallen by 45% so far this year, as investors have raised concerns about the group’s debt load and growth prospects. A recent proposal to ban menthol cigarettes in the US — a major market for the firm — has increased the stock’s decline.

However, a ban could take years to agree and Big Tobacco has weathered many such storms before. A recent trading update confirmed that full-year profit guidance was unchanged and that debt reduction plans are on track.

BAT stock currently trades on just 9.3 times 2018 forecast earnings, with a 7.3% dividend yield. I’d rate the shares as a value buy at this level.

Safer than houses

Whatever the outcome of Brexit, I’m pretty sure that electricity and gas will continue to flow through the networks operated by National Grid (LSE: NG) and into our homes, offices and factories.

The market seems confident, too. National Grid’s share price has risen by about 4% so far this year, leaving it comfortably ahead of the FTSE 100 index.

It’s easy to forget that around one third of this group’s profits now come from its US operations, so earnings and dividends aren’t completely dependent on the UK market.

However, what I like most about this business is that so much of its income comes from charges for using its transmission networks. There’s no alternative to this in most of the UK, so long-term income visibility should be excellent.

At about 840p, the stock offers a forecast dividend yield of 5.6%. I see this as a low-risk income buy.

Want a bit more excitement?

My third pick is a little different. FTSE 100 IT group Micro Focus International (LSE: MCRO) specialises in running and maintaining legacy IT systems for major clients. Until this year, it’s been a strong performer, with high margins and good cash generation.

However, the firm ran into some problems in March as a result of its acquisition of the HP Enterprise Software business in 2017. The profit warning which followed caused the shares to fall 50% in less than a week.

I thought the sell-off was overdone and called the shares as a buy in July and September. The share price has risen by another 10% since then, but still looks affordable to me on just 10 times 2018 forecast earnings. There’s also a tempting 5.5% dividend yield.

Recent management reports suggest that a renewed focus on implementing the firm’s proven operating model is delivering results. I think the shares could deliver attractive gains from their current level.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Micro Focus. 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.