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.
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.