The Motley Fool

3 FTSE 100 stocks with dividends over 5% I’d buy today

Image source: Getty Images.

If you are looking for FTSE 100 dividend stocks, I highly recommend taking a closer look at mining giant Glencore (LSE: GLEN). This is one of the most important companies in the world, although most consumers don’t know it exists.

As well as being one of the largest mining businesses, the company is also one of the largest commodity traders. This means the group is responsible for getting commodities, such as iron ore, copper, coal and oil, from where they’re produced to the end consumer, a hugely complicated process that requires lots of planning and infrastructure.

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...

There are only a handful of companies that are geared up to take on these challenges on such a large scale. Glencore is the biggest. 

As the global economy continues to expand, demand for Glencore’s services should only increase, and that’s why I’m recommending the stock as an income investment. Shares in the company currently support a dividend yield of 6.3% and trade at a forward P/E of 9.5 for 2020, based on current City estimates. 

Current projections suggest the dividend yield will be covered 1.8 x earnings per share next year. 

Special dividend

Another blue-chip stock yielding more than 5% that currently looks interesting as an investment is retailer Morrisons (LSE: MRW). A few years ago, the supermarket group was struggling. Morrisons, alongside the rest of the sector, was finding it tough to compete with the rise of the low-cost German discounters. While this threat hasn’t vanished, Morrisons has been able to win back customers by offering a better service at a similar price.

These efforts are now starting to pay off handsomely. The group reported stronger-than-expected profits for the six months to 4 August of £198m off the back of a 0.4% increase in total revenue.

Management was so pleased with these numbers, it decided to declare a special dividend of 2p per share. If this trend continues, City analysts believe shares in Morrisons will yield a total of 4.8% in its current financial year, rising to 5.1% for fiscal 2021.

With the payout covered 1.5 times by earnings per share as well, it looks to me as if management has plenty of room to increase the payout further from current levels as well. 

Undervalued income

The final FTSE 100 dividend stock I’m going to highlight is water supply United Utilities (LSE: UU). Threats from Labour leader Jeremy Corbyn to nationalise utility suppliers if he comes to power have weighed on the share prices of all utility companies over the past few years. However, I think there’s actually quite a small chance this will ever happen. Corbyn wants to nationalise utilities, but doing so would require the support of the courts as well as parliament, which he’s unlikely to have.

On this basis, I reckon it’s worth taking advantage of the negative market sentiment to snap up shares of undervalued utility companies.

Today, shares in United offer a dividend yield of 5.3%. The distribution is covered 1.4 times by earnings per share, so it looks as if it’s safe for the time being. Historically, the company’s dividend yield has averaged around 4.5%, which implies the stock is undervalued by nearly 18% at current levels. 

“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!

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.

Our 6 'Best Buys Now' Shares

The renowned 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 enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.