The FTSE 100 is up 3% on the day as I write, but since 19 February it’s still down 17% on coronavirus fears. And I reckon that’s pushed FTSE 100 dividend stocks to the fore.
We’ve seen similar falls before, and the UK’s top index has always come bouncing back. I don’t expect this time to be any different, and I’m looking for some of the top dividend stocks that have become even cheaper. Here are three that I like the look of.
Aviva (LSE: AV) has fallen 21% over the period. Perhaps that’s not surprising for a FTSE 100 dividend stock in the life insurance business when a potential human disaster is looming.
But Aviva has just reported a record operating profit of £3.2bn, and the shares are sitting on what looks to me like a crazily low valuation.
We’re looking at P/E valuations of under six on current forecasts. Now, those forecasts might be adjusted downwards as the coronavirus pandemic develops. But even so, I’m seeing a lot of bad news already built into that pessimistic valuation — and I think it’s more bad news than we’re likely to see.
And just look at the dividend. Aviva’s dividends have been growing steadily, and the share price drop has pushed the forecast yield up to 10%. Aviva looks like one of the best FTSE 100 dividend stocks right now, and I might buy some more.
I’ve been keen on BAE Systems (LSE: BA) for some time. It’s in a sector that can have its ups and downs over the short term, but long-term demand remains strong. You can see the erratic short-term nature of sentiment towards the business too, by looking at the share price.
But we can see volatility as a provider of buying opportunities when share prices are down. And BAE’s shares are in a downswing now, along with everything else. We’re seeing a 16% fall since the coronavirus panic has been going, and I think that’s pushed BAE shares firmly into buying territory.
EPS has been modestly but steadily growing, and there are two more years of 5%-7% rises predicted. I don’t really see how coronavirus is going to adversely affect that, and I reckon BAE’s forecasts are perhaps among the most dependable out there.
The forecast dividend yield is up to 4.3% now. And covered twice by forecast earnings, I see this FTSE 100 dividend stock as another to snap up for long-term income.
If markets are in a turmoil and you’re not sure what to buy, why not just buy the market? You could do that by buying an index tracker, but in this case I just mean buy companies whose business it is to buy and sell the market. I’m thinking of St James’s Place (LSE: STJ) specifically.
The wealth manager’s share price is down 23% during the panic. I’m guessing that’s because investors fear any FTSE-related losses will be geared downwards and profits will be hit disproportionately. If the stocks that St James’s Place holds should fall, the firm will lose out on the charges it can levy.
There’s a 7% EPS drop on the cards, and it could be a bit worse than that, so that’s something we need to be prepared for. But St James’s Place has a long-term progressive dividend policy. And if the 2020 dividend meets expectations, it would yield 5.7%.
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Alan Oscroft owns shares of Aviva. 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.