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Two FTSE 100 dividend shares I’d buy and hold forever

With the FTSE 100 expected to deliver an overall dividend return of 4.9% this year, and cover by earnings being stronger than it’s been for years, I reckon we’re in one of the best income investing periods I’ve seen in a long time.

Leaving out income stocks I already hold, I want to share my thoughts on two that are on my current shortlist.

Weak advertising

One is ITV (LSE: ITV), whose shares have lost more than a third of their value over the past 12 months. The malaise stems largely from falling advertising revenues, with the three months to March seeing a 7% decline — together with a similar 7% dip in overall Broadcast & Online revenue.

But that’s pretty much in line with the firm’s guidance, as chief executive Carolyn McCall stressed that “ITV’s performance in the first three months was very much as we expected.” The first half is going to look weak compared to last year too, partly due to general economic gloom, but also because it can’t really compare to the attraction of last year’s FIFA World Cup.

As Royston Wild suggests, the cancellation of the Jeremy Kyle show has raised fears for the rest of ITV’s reality show portfolio — and, though I’ve no idea why, they do keep a lot of eyes glued to screens.

But overall viewing figures are holding up well, the launch of BritBox is still on track for the second half of the year, and ITV Studios revenue is growing nicely.

Yes there are risks, and yes there could be more bumps in the road ahead. But I think there’s too much fear in a P/E of under 10, and ITV’s 6.4% dividend yield has the stock firmly in my top three to buy next.

New golden era?

The pharmaceuticals business is a prime example of a long-term business, with the lifecycle of a drug being very long — including the time it takes, coupled with huge costs, to reach commercial sales in the first place.

It was always going to take GlaxoSmithKline (LSE: GSK) a good few years to recover from the loss of key patents it suffered and to get its drug development pipeline strengthened with new prospects.

The company has had a few recent years of decent, if not stellar, earnings growth. But the key thing for me is that it’s been paying dependable dividends. At a steady 80p per share per year, the yield has been fluctuating in the 5% to 6% zone depending on share price movements, with a forecast yield of 5% for this year and next.

On the cautious side, the planned drug pipeline resurgence has taken longer than expected, there’s a lot of debt, and weakening free cash flow could have an impact on the dividend. And though the dividend has been maintained, there will be a lot of investors disappointed by the company’s failure to get its earnings back to steady growth yet and get a progressive dividend policy back in place.

In short, GlaxoSmithKline is probably riskier than many people might think.

But with the shares having suffered a weak five years and on a middling P/E of around 14, I still see the risk compared to potential reward ratio as favourable.

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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended ITV. 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.