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Attention income investors! 2 bargain FTSE 100 dividend champs to watch out for in March

Next month sees another flurry of results and updates from a host of popular dividend stocks, so here I’m turning my attention to two examples from the FTSE 100 that I believe offer excellent value for those looking to secure a reliable second income stream.

Down but not out

Insurer Aviva (LSE: AV) is set report its latest set of full-year numbers on 7 March. Considering it will be five months since former CEO Mark Wilson surprised everyone by announcing his departure from the company, it’s understandable that many investors will be looking for signs of progress in appointing a new leader. Andy Briggs — the current boss of Aviva’s UK Insurance arm — was an early favourite, but shareholders may prefer an external candidate to mark a new chapter. 

One thing’s for sure, whoever takes over at the top will be inheriting a business in far better health than it used to be. Under Wilson’s stewardship since 2012, Aviva improved its profitability, invested heavily in its technology and halved the number of markets it has exposure to. It also completed one of the biggest takeovers in recent times by acquiring Friend’s Life three years ago. 

Unfortunately for holders, this progress hasn’t yet been reflected in its share price to date. Personally, I see this as an opportunity. Right now, you can pick up Aviva’s stock for just 7 times forecast 2019 earnings. In spite of Brexit and ongoing economic and political fragility elsewhere, that valuation still looks too low in my view.

And even if it does take longer than expected for the £17bn-cap to re-discover its mojo, holders are being well-compensated for their patience. Based on an expected 33.4p per share cash return in the new financial year, the stock yields 7.9%, making Aviva one of the biggest dividend payers in the market’s top tier.

Reliable dividends

Reporting full-year results a day earlier than its industry peer is Legal & General (LSE: LGEN).

Founded in 1836, the £16bn-cap is one of Europe’s biggest asset managers and a market leader for life insurance and other retirement products in the UK. 

Following a pretty poor performance over the second half of 2018 (which I attribute more to the volatility seen in global financial markets rather anything actually wrong with the company), Legal’s stock has bounced back to form since the start of the new year.

A rise of almost 18% in a little under two months is a pretty impressive recovery for such a market juggernaut. Nevertheless, its valuation remains attractive.

Based on analyst expectations of 30.6p earnings per share, L&G currently trades on a P/E of just less than nine. That’s not as cheap as Aviva but still very reasonable considering its diversified business model and international growth opportunities, particularly in the US. 

A predicted total payout of 16.4p per share gives a yield of just over 6% for the current year. Like Aviva, dividends are adequately covered by expected profits and look secure for now — something that certainly can’t be said about other income favourites in the FTSE 100.

Tempted? If so, just be careful to buy your slice of Legal & General (or Aviva) in a tax-free wrapper such as a Stocks and Shares ISA, thus ensuring you’ll not be liable for any tax on any of that lovely income you’ll receive. 

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Paul Summers 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.