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Are these 5 FTSE 100 8%+ dividend stocks too good to be true?

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The stock market crash has left many FTSE 100 dividend stocks offering yields of more than 8%. In these days of near-zero interest rates, this is very tempting. 

Unfortunately, we’re also seeing many companies suspend their dividends as a precaution against possible losses resulting from the coronavirus pandemic.

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Here, I’ve chosen five FTSE 100 stocks yielding over 8% which haven’t cut their payouts. Should I be buying these dividend stocks today?

Housebuilding hero?

FTSE 100 housebuilder Taylor Wimpey was planning to return around £610m to shareholders this year, or about 18.6p per share. This would give the shares an impressive 14% dividend yield.

The company has been a good dividend stock in recent years. But profit forecasts are now falling and this payout is no longer covered by earnings. I expect the housing slowdown to extend beyond the pandemic.

Although Taylor Wimpey ended last year with a cash balance of £640m, this drops down to a net debt of £184m, when loans and money owed for land purchases is included. I’m not buying.

I’d buy this 9% dividend stock

Oil and gas supermajor BP is facing a big hit to profits this year as a result of the oil price crash. However, this FTSE 100 heavyweight has plenty of financial firepower and has survived such storms before.

The company has cut planned spending and expects to continue receiving cash from asset sales. Although the dividend is unlikely to be covered by earnings this year, I don’t think it’ll be cut unless the oil slump continues into 2021. I think this 9% yield could be worth buying.

City name promises 13% yield

Fund manager M&G is a recent arrival in the FTSE 100. Formerly part of Prudential, it now operates independently.

City forecasts for 2020 suggest a payout of 17.7p per share, giving a prospective yield of 13%. My sums suggest this payout could be affordable. If I’m right, it would make M&G one of the highest-yielding dividend stocks in the FTSE 100.

My only concern is that this group is still in cost-cutting mode and needs to deliver real growth. However, I think this share’s forecast P/E of 6 already reflects this risk. I’d buy at current levels.

Iron, steel and cash

Russian mining and steel group Evraz has a reputation as one of the highest-yielding dividend stocks in the FTSE 100. The group paid around $1bn to shareholders in 2019. That gives the shares a trailing yield of about 22% at the current share price.

City analysts don’t expect this bumper payout to be repeated in 2020. But they’re forecasting a total payout of $0.40 per share, which would give Evraz a dividend yield of about 13%.

Demand for the group’s products could be hit by a Covid-19 recession. But this £4bn business still looks like a good income buy to me.

This sin stock pays 12%

Imperial Brands changed its name from Imperial Tobacco a few years ago. But the owner of brands such as JPSWest and Winston hasn’t changed its core business — selling cigarettes.

Tobacco firms have been reliable dividend stocks for many years. High profit margins, strong cash generation and stable sales mean they’re able to provide generous payouts each year. 

Imperial is expected to trim its payout this year to speed up debt reduction. That still leaves the stock with a forecast yield of 12%. I see this as an income buy.

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Roland Head owns shares of Imperial Brands. The Motley Fool UK has recommended Imperial Brands and Prudential. 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.

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