Dividend stocks are proving problematic right now. Of course, dividends are never guaranteed, even at the best of times. But with companies currently intent on conserving cash, due to the uncertain duration of the Covid-19 pandemic, it’s hard to say any dividend is safe.
Nevertheless, some firms appear better placed than others to maintain their payouts. Here are three FTSE 100 dividend stocks I think are strong candidates. I see them as bargain buys today.
Reaffirmed dividend intention
Coca-Cola HBC (LSE: CCH) is one of the largest bottling and distribution partners of The Coca-Cola Company. Due to its brilliant brands, it’s among my favourite dividend stocks.
Following another strong set of annual results in February, CCH issued a Covid-19 update on 27 March. It told us that in markets with heavy lockdowns, “demand in the ‘out of home’ channel has been severely affected.”
However, management said it’s taking actions to help “support our profitability.” It also reassured investors: “We benefit from a very strong balance sheet.” As a result, the board reaffirmed its “intention to propose an ordinary dividend of €0.62 per share.” This is an 8.8% increase on the previous year, and translates to 53.9p per share at current exchange rates.
CCH’s share price is 1,928p, as I’m writing, which is a 37% discount to its 52-week high. Due to the fall in the share price, the prospective dividend yield is an historically generous 2.8%. Meanwhile, the forward price-to-earnings (P/E) ratio is an historically cheap 17.1.
One of the most popular dividend stocks
As far as we know, there’s been no negative impact from Covid-19 on the business of drugs giant GlaxoSmithKline (LSE: GSK). In fact, its recent news releases could be positive for the company, and the wider world.
On 6 April, it announced a collaboration with US firm Vir Biotechnology to find coronavirus solutions. And earlier this week, a collaboration with French big pharma peer Sanofi to develop a Covid-19 vaccine was added.
GSK has long been one of the FTSE 100’s most popular dividend stocks. This despite its payout having been pegged at 80p per share for a number of years, due to a challenging period of patent expiries. In its annual results in February, it said it expects to maintain the payout at 80p for 2020.
At a share price of 1,654p (10% below its 52-week high), the dividend yield is a chunky 4.8%. The forward P/E of 14.5 is also attractive, in my view.
Utility dividend stocks
Regulated utilities, if well-managed, can be reliable safe-haven dividend stocks. I like the look of water company Severn Trent (LSE: SVT) right now.
On 28 January, it announced its new dividend policy for the next five years. Namely, “growth of at least CPIH” inflation. It said it expects to pay 100.08p per share for its financial year ended 31 March.
In a trading statement on 31 March, it said: “We have good financial resilience with which to manage the impact of the [Covid-19] outbreak.” And while it added “we will continue to closely monitor our cash flows,” there was no mention of any change to dividend expectations.
At a share price of 2,346p (13% below its 52-week high), the dividend yield is 4.3%, and the P/E is 17.4. I feel this is another attractive dividend stock to buy today.
G A Chester has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. 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.