Cryptocurrency Bitcoin maybe climbing again, but I still believe FTSE 100 dividend stocks are a superior way to build your long-term wealth. While the stock market has been hit hard by the pandemic, history shows it always recovers in the long run.
This year’s sell-off gives you a great opportunity to buy cheap UK shares, and generate the income and growth you need to get rich and retire early, if that’s what you want.
Although many FTSE 100 dividend stocks have suspended their shareholder payouts, others still yield 4%, or more. By contrast, Bitcoin doesn’t pay any income, and never will. Also, its movements are entirely unpredictable. Nobody knows why it has just shot up to $11,300. It just did. Next week’s movements will be just as random. That’s why I’d rather buy these two bargain-priced shares.
Unlike Bitcoin, grocery chain J Sainsbury (LSE: SBRY) has a key role to play in a modern global economy – keeping people fed. The big supermarkets proved their value during the pandemic. What did Bitcoin do?
Check out this cheap FTSE 100 dividend share
The problem with investing in supermarkets is that they operate to fine margins in a highly competitive market. In the case of Sainsbury’s, profit margins stand at just 2.2%. The arrival of Aldi and Lidl from Germany has made a tough job even harder. The Sainsbury’s share price is down a third compared to two years ago, despite avoiding the worst of this year’s stock market crash.
Investors who hold Sainsbury’s should treat any share price growth as a bonus, and focus on the FTSE 100 group’s dividend income prospects. Management deferred its payout in April, despite rising sales, as it didn’t want to be seen as profiteering in the lockdown. Analysts predict it will be back next year, and forecast a yield of 4.8%, nicely covered 1.8 times.
I would, nonetheless, consider buying this top FTSE 100 dividend stock at today’s attractive entry point of just 10.1 times earnings. That looks good value, whereas Bitcoin’s inflated price scares me.
Get rich and retire early on this
The mining sector is a happy hunting ground for FTSE 100 dividend stocks, and I’d also check out the Anglo American (LSE: AAL) share price. Mining companies are a play on global growth, because they provide the metals and minerals expanding economies need. In particular, they’re a play on Chinese growth. That’s where most of the demand has come from for the last 20 years.
Naturally, they crashed in March, along with everything else. However, China appears to emerging from the pandemic in a better shape than the West, and Anglo American’s stock has now rebounded almost 50% in the last six months. Despite this, it still trades at just 9 times earnings. That’s a tempting empty price. If you want to generate dividend income to fund your retirement, it currently yields 4.4%, covered 2.5 times.
I’d check out these cheap FTSE 100 dividend income stocks. And approach Bitcoin with extreme caution.
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Harvey Jones 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.