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Two FTSE 100 dividend stocks I’d buy before February

While the FTSE 100 has bounced a little in January after falling below 6,600 points in late December as global equity markets tumbled, there is still a lot of value on offer within the index right now. This is particularly true if you’re a dividend investor, as many FTSE 100 companies offer fantastic yields at present. Here’s a look at two high-quality dividend-paying companies that I think are worth buying for income right now.

St. James’s Place

St. James’s Place (LSE: STJ) is a wealth management group that offers advice to individuals, trustees, and businesses. Through a network of nearly 4,000 expert advisers, the company offers services such as investment planning, retirement/pension planning, risk protection, and inheritance planning. The group is clearly good at what it does, as its client retention rate is consistently above the 95% mark.

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What I like about St. James’s Place is that the company looks very well placed to help retiring baby boomers with their financial planning requirements in the coming years. The financial environment is challenging at present (low interest rates, volatile stock markets, changing regulation, Brexit uncertainty) and for this reason, I’m convinced that demand for trusted face-to-face financial advice will remain robust in the years ahead. Just last week, the group advised that it continues to see “growing demand” for advice and that it remains “extremely well placed” to continue growing over the medium term.

From a dividend-investing perspective, STJ offers a lot of appeal at the moment, in my view. Last year, the group paid out 42.9p per share in dividends, which equates to a yield of 4.4% at the current share price, and for FY2018, analysts expect a 12% rise in the payout to 48.1p per share, which translates to a yield of 5%. It’s worth noting that the group has an excellent dividend growth history and has never cut its dividend. With the stock down around 20% over the last six months on the back of equity market weakness and currently offering a fantastic yield, I think now is the time to take a closer look.

Smurfit Kappa

Another FTSE 100 dividend stock that has experienced share price weakness over the last six months is Smurfit Kappa (LSE: SKG). It’s a packaging company that has a focus on sustainable products and operates 350 production sites across 33 countries.

One reason I like Smurfit shares is that I’m bullish on the long-term prospects for the packaging sector due to the important role packaging plays in e-commerce. If you buy something large online these days, it’s almost certain to come in some kind of cardboard box, so packaging companies essentially offer an indirect way to profit from the increasing popularity of online retailers such as Amazon, Argos, and ASOS. The fact that SKG is focusing on 100% renewable products is another advantage, as that is clearly the direction the world is going in.

Smurfit Kappa has increased its dividend substantially in recent years and analysts expect another 7% hike for FY2018, taking the payout to €0.94, which equates to a healthy yield of 3.8% at the current share price. The stock has been sold off recently on the back of global recession fears, although I think the sell-off has been excessive. Trading on a P/E of 8.6, I see a lot of value on offer at present.

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Edward Sheldon owns shares in St. James's Place. 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.

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