Low interest rates may mean FTSE 100 dividend stocks could become increasingly popular among income-seeking investors over the coming years.
However, in recent months, many former FTSE 100 dividend champions have cut their payouts to investors.
But some companies have held firm. Two of these FTSE 100 dividend stocks, in particular, look attractive in the current market. Buying these shares today may lead to high capital and income returns over the coming years.
FTSE 100 dividend stocks to buy
Utility group National Grid (LSE: NG) is one of the few FTSE 100 companies that’s continued to report high demand for its services in the economic lockdown.
Its latest trading update noted that the firm has “not seen a material impact on our financial performance” as a result of the coronavirus crisis. While the report did go on to note that the group was starting to see some delays creeping into its capital programme, it’s reassuring to see its underlying business performing well.
The group also said it has amassed £5.5bn of financing to support its operations through these uncertain times.
The FTSE 100 company is yet to decide on the level of its latest dividend payout. But, considering the limited impact the lockdown has had on operations, management could decide to hold the dividend firm.
As such, with the shares currently yielding 5.5%, the FTSE 100 champion could well become a more popular income share while interest rates are stuck at historic lows.
Another FTSE 100 company that may continue to attract income investors’ attention is SSE (LSE: SSE).
The energy group is also likely to report a robust trading performance during the first half of 2020. Although the FTSE 100 company has faced headwinds in recent years, before coronavirus it was making encouraging progress on its new strategy.
While SSE has been investing heavily in new renewable energy assets, the company recently sold its energy supply business. This removed the firm from the unpredictable and competitive retail supply business.
By focusing on renewable energy, the company is positioning itself firmly for the future, and demand for its experience is rising. For example, SSE recently sold 51% of its $3.7bn offshore wind farm project to French energy major Total.
These initiates should help protect the company’s dividend. Analysts had been expecting the group to reduce its payout this year, reflecting the sale of the retail energy business. However, even after this decline, the stock is set to yield more than 6%.
After falling by nearly 25% from its one-year high, the FTSE 100 share appears to offer a margin of safety.
Considering SSE’s defensive nature, it could offer a relatively attractive total return in the coming years during an uncertain period for the world economy.
Therefore, it could be a worthwhile investment at present.
There's at least one other dividend stock that we think is worth buying right now.
With global markets in turmoil as the coronavirus pandemic tightens its grip, turning to shares to generate income isn’t as simple as it used to be…
As the realities of ‘life under lockdown’ begin to bite, many of the stock market’s ‘go-to’ high-yielding companies have either taken an axe to their dividend pay-outs… or worse, opted to suspended them altogether – for the near-term at least.
With so many blue-chip and mid-cap companies scrambling to hoard cash right now, where are we income investors to turn for decent yields?
Fortunately, The Motley Fool is here to help…
Our analyst has unearthed what he believes could be a very attractive option for income- seeking investors – a company that, in his view, boasts a ‘reliably defensive’ business model, combined with a current forecast dividend yield of 4.2% to boot!*
But here’s the really exciting part…
This business even has form in riding out this kind of situation, too… having previously increased sales and profits back in 2008 and 2009 when the world was gripped in the deepest economic crisis since the Great Depression.
*Please be aware that dividends are variable and not guaranteed.
Rupert Hargreaves has no position in any of the shares mentioned. 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.