Here are 2 unloved 5%-yielding FTSE 100 dividend stocks I’d buy right now

These FTSE 100 stocks are dirt-cheap and offer a market-beating dividend yield, says this Fool.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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.

Glencore

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.

Carnival

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.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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.

More on Investing Articles

Young female business analyst looking at a graph chart while working from home
Investing Articles

Is Avon Protection the best stock to buy in the FTSE All-Share index right now?

Here’s a stock I’m holding for recovery and growth from the FTSE All-Share index. Can it be crowned as the…

Read more »

Investing Articles

Down 8.5% this month, is the Aviva share price too attractive to ignore?

It’s time to look into Aviva and the insurance sector while the share price is pulling back from year-to-date highs.

Read more »

Investing Articles

Here’s where I see Vodafone’s share price ending 2024

Valued at just twice its earnings, is the Vodafone share price a bargain or value trap? Our writer explores where…

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

The Darktrace share price jumped 20% today. Here’s why!

After the Darktrace share price leapt by a fifth in early trading, our writer explains why -- and what it…

Read more »

Dividend Shares

850 shares in this dividend giant could make me £1.1k in passive income

Jon Smith flags up one dividend stock for passive income that has outperformed its sector over the course of the…

Read more »

Investing Articles

Unilever shares are flying! Time to buy at a 21% ‘discount’?

Unilever shares have been racing higher this week after a one-two punch of news from the company. Here’s whether I…

Read more »

artificial intelligence investing algorithms
Market Movers

The Microsoft share price surges after results. Is this the best AI stock to buy?

Jon Smith flags up the jump in the Microsoft share price after the latest results showed strong demand for AI…

Read more »

Google office headquarters
Investing Articles

A dividend announcement sends the Alphabet share price soaring. Here’s what investors need to know

As the Alphabet share price surges on the announcement of a dividend, Stephen Wright outlines what investors should really be…

Read more »