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2 FTSE 100 dividend stocks I’d buy today

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It’s been a pretty dismal year for income investors. A total of 445 companies listed on the London Stock Exchange have either cancelled, cut or suspended dividend payments. This has included previous big dividend-payers such as BT Group and Royal Dutch Shell. Nonetheless, some FTSE 100 companies have remained committed to payments, and these two dividend stocks are my top picks.

A pharmaceuticals giant

GlaxoSmithKline (LSE: GSK) is one of the leading healthcare companies in the world. The group operates in three different business segments, including pharmaceuticals, vaccines and consumer healthcare. And while this is seen as a fairly defensive sector, especially during a pandemic, the giant group hasn’t been immune to the impacts of coronavirus. For example, turnover in the vaccines sector fell by 29% in the second quarter as regular vaccination programmes were delayed. And adjusted operating profits were 19% lower than the previous year. This has seen its share price fall by 20% this year, leaving the stock looking very cheap indeed.

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But it’s the firm’s status as a dividend stock that grabs my interest. While there has been limited dividend growth over the years, the company has consistently made dividend payments of 80p a year. At its currently depressed price, this equates to a very strong yield of 5.6%. With dividend cover of around 1.6, the payout is also well-covered by earnings, and I can’t see a cut coming any time soon. Consequently, I’d buy Glaxo shares at their current valuation.

A dividend stock yielding over 8%

Often a very high dividend yield can indicate limited growth in a company. A dividend cut may also be very likely at some point in the near future. Even so, in the case of Legal & General (LSE: LGEN), I think neither of these apply.

For example, the firm has seen significant growth in the past few years, with 2019 earnings rising 12% from the year before. The first-half trading update was also positive, and operating profits totalled £946m. This was only a 6% decrease compared to the same period in 2019, showing a strong performance in a difficult economic environment. I believe that the insurer should be able to continue growing profits over the next few years, thanks to its status as the UK’s leader in bulk annuities, life insurance and other retirement products. An ageing population should help to drive this growth.

Strong profits also allowed the group to announce an interim dividend of 4.93p. This corresponds to a total year payout of 17.57p, or a very high yield of 8.6%. The fact that the dividend was higher than the previous year further demonstrates LGEN’s standing as an excellent dividend stock. I reckon investors can expect further increases in the forthcoming years, and as such, I’d happily buy this stock today.

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Stuart Blair owns shares in Legal & General and Royal Dutch Shell. The Motley Fool UK 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.

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