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2 dirt-cheap FTSE 100 dividend stocks I’d buy yielding up to 11%!

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There are a handful of stocks in the FTSE 100 that support double-digit dividend yields right now, and one of these is Evraz (LSE: EVR). The steel maker and mining giant has something of a bad reputation among investors. It was heavily loss-making in the years before 2016 and the company was worth a 10th of what it is now.

But in the years since, Evraz has gone from strength to strength. Last year, it reported a net income of $2.4bn, and this year analysts have pencilled in a projected net profit of $1.4bn.

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Cash returns

As profits have boomed, the company has adopted a policy of returning as much cash as possible to shareholders. In 2017, it distributed $0.30 per share and management declared a $1.18 (97p) per share distribution in 2018.

With earnings set to fall by around 38% for fiscal 2019, analysts aren’t expecting the company to repeat last year’s performance. Instead, they’ve pencilled in a full-year dividend of $0.66 (54p), giving a dividend yield of 11%. Still, if Evraz hits this objective, it’ll have returned a total of 175.6p per share to investors over the three-year time frame, 34% of its current share price.

I’m confident that this trend will continue. You see, Evraz’s two highest-ranking managers, Alexander Abramov and Alexander Frolov, own around 30% of the business. This implies they’ll work to achieve the best results for the company’s owners because they stand to lose more than most other shareholders if they don’t.

That’s why I think it could be an excellent addition to your portfolio if you’re looking for a blue-chip income stock trading at a bargain-basement price.

Brand value

Shares in International Consolidated Airlines (LSE: IAG) have taken a hammering over the past few months as the group’s flagship British Airways brand has suffered from strikes, IT glitches and lousy customer service. A recent survey of air travellers ranked BA as one of the worst airlines in the world to fly with, an accolade no brand wants to achieve.

These issues have sent investors running for the hills. Since the beginning of the year, shares in the airline group have fallen more than 30%, excluding dividends, and are currently dealing at a forward P/E of 4.3.

Nevertheless, despite the firm’s problems, I think IAG has a bright long-term outlook. The company operates somewhat of a monopoly over the landing slots at Heathrow, which gives it a tremendous competitive advantage. The group holds nearly two-thirds of airport’s current capacity, so while customers might not want to travel on the airline, their other options are relatively limited.

With this being the case, the market seems to have overreacted with regards to IAG’s valuation. The stock is around 50% cheaper than its international peers, despite its UK-market share. In my opinion, this indicates a wide margin of safety for investors buying at current levels. Only adding to the appeal is the company’s 6.5% dividend yield.

Considering all of the above, if you’re looking for a dirt-cheap, blue-chip dividend stock for your portfolio, I highly recommend taking a closer look at IAG.

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Rupert Hargreaves owns no share 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.

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