The Motley Fool

3 FTSE 100 dividend stocks that yield 7%. I’d buy them today

After last week’s correction, the FTSE 100 offers a dividend yield of 4.9%. That’s a pretty attractive level of income, but wouldn’t it be great if we could earn even more? I think we can. Today, I’m going to look at three stocks with forecast dividend yields of around 7% that I’d buy today.

A proven survivor

It’s a tough time for Asia-focused HSBC Holdings (LSE: HSBA). The banking giant is without a permanent chief executive and is in the early stages of a major restructuring programme. Alongside this, there’s a risk the coronavirus outbreak will lead to an increase in bad debts and an economic slowdown.

Claim your FREE copy of The Motley Fool’s Bear Market Survival Guide.

Global stock markets may be reeling from the coronavirus, but you don’t have to face this down market alone. Help yourself to a FREE copy of The Motley Fool’s Bear Market Survival Guide and discover the five steps you can take right now to try and bolster your portfolio… including how you can aim to turn today’s market uncertainty to your advantage. Click here to claim your FREE copy now!

However, I think most of this bad news is already reflected in the HSBC share price, which has fallen by 15% so far this year. It’s also worth remembering that HSBC is 155 years old. It’s survived world wars, revolutions and other disruptive events.

At about 515p, the bank’s shares now offer a dividend yield of 7.8%. How safe is this payout? Interim CEO Noel Quinn has said the dividend will be maintained during the restructuring programme. I also believe the bank’s strong balance sheet and large scale means this should be affordable.

As a result, I think HSBC’s solid dividend is a rare buying opportunity for income investors.

Steady progress

The next pick on my list is British American Tobacco (LSE: BATS), whose brands include Dunhill, Lucky Strike and Camel. The firm also owns vaping brands Vype and Vuse.

Big tobacco stocks are unloved by investors, who fear the long-term decline of this market. However, so far, these fears seem unfounded. BAT’s sales rose by 5.7% to £25,877m last year. The group’s adjusted operating profit was up 7.6%, at £11,130m.

British American still faces some challenges. Borrowings are high following the acquisition of rival Reynolds American. Although net debt fell by 3.9% to £41,726m last year, I’d prefer to see this figure falling faster.

However, the firm’s strategy of focusing on a smaller number of larger brands seems to be working. Cash generation remains very strong and I don’t see any threat to the group’s dividend, which currently provides a yield of 7.1%. For income seekers who are happy to invest in tobacco, BAT looks a decent buy to me.

Rough seas

My last pick is a little riskier. Cruise ship operator Carnival (LSE: CCL) is suffering as a result of the coronavirus outbreak. The group is the world’s largest cruise firm, with brands including Holland America, Princess Cruises and P&O Cruises.

The company has already warned that coronavirus is likely to have a serious impact on its 2020 profits. However, the firm says it’s too soon to say exactly how bad the impact will be on future bookings.

I suspect 2020 will be a very tough year for Carnival (and most other travel firms). But cruise holidays are incredibly popular globally and I’m confident this market will recover. As it does, I’d expect Carnival to be one of the first to benefit, thanks to its size and reach.

Carnival shares offer a dividend yield of about 7%, at the time of writing. There’s some risk this payout will be cut. But even if it is, I believe this stock is likely to be a good long-term investment from current levels.

A top income share with a juicy 5% forecast dividend yield

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.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Income Share… free of charge!

Roland Head owns shares of Carnival. The Motley Fool UK has recommended Carnival and HSBC Holdings. 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.