The FTSE 100’s recent declines have thrown up some fantastic bargains for investors. Notably, income investors. With that being the case, here are two unloved 5%-yielding FTSE 100 dividend stocks that I would buy right now.
Shares in commodities trading giant Glencore (LSE: GLEN) have been under pressure over the past 12 months. Investors have been bailing out of the stock because the company has been caught up in bribery allegations. On top of this, some of Glencore’s operations around the world haven’t been performing as smoothly as management might have liked.
While both of these problems are concerning, they’re just part and parcel of operating in the commodities business.
The good news is Glencore knows its markets well because, in most commodities markets, the company is the largest buyer and seller.
This is unlikely to change any time soon. To be a good commodities trader, you need a well-developed international network as well as economies of scale. There are only a handful of businesses that even come close to competing with Glencore’s size and reputation.
This suggests Glencore is well-placed to continue to dominate the global commodities market. As such, now could be an excellent time to snap a share in this business at a discount valuation.
It’s currently dealing at a price to earnings (P/E) ratio of 13.3 and supports a dividend yield of 6.2%.
Another bonus is the fact Glencore’s is management is a substantial shareholder in the business. So other investors can rest safe in the knowledge that they’ll work to achieve the best outcome for all shareholders because they’ve got so much money riding on its success as well.
It also appears shares in global cruise group Carnival (LSE: CCL) are suffering from short-term factors. Investors seem to be worried that the company’s earnings will slump in 2020 as two of Carnival’s vessels have been tied to coronavirus outbreaks.
That may be the case, but from a long-term perspective, the fundamentals of the business are robust. The cruise industry still represents a tiny share of the global travel market and Carnival is trying to capitalise on this.
Over the past decade, the company has invested billions of dollars in new ships and experiences for customers. And while earnings have been volatile from year to year, this investment has enabled the group’s earnings per share to increase at an average annual rate of 23% over the long run.
This suggests now could be an excellent time to buy into the cruise company’s growth.
At the time of writing, the stock is trading at a forward P/E of 8.8. It also supports a dividend yield of 5.1%. These metrics suggest the stock offers a wide margin of safety at current levels. Shareholders with a long-term perspective could be well rewarded.
Income-seeking investors like you won’t want to miss out on this timely opportunity…
Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this out-of-favour business that’s throwing off gobs of cash!
But here’s the really exciting part…
Our analyst is predicting there’s potential for this company’s market value to soar by at least 50% over the next few years...
He even anticipates that the dividend could grow nicely too — as this much-loved household brand continues to rapidly expand its online business — and reinvent itself for the digital age.
With shares still changing hands at what he believes is an undemanding valuation, now could be the ideal time for patient, income-seeking investors to start building a long-term holding.
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Rupert Hargreaves owns shares in Carnival. The Motley Fool UK has recommended Carnival. 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.