I’m currently combing the market for blue-chip income stocks. The Bank of England’s decision to slash interest rates to record lows earlier this year has caused havoc for savers across the country. However, many FTSE 100 shares offer dividend yields of 4%, or more. Compared to the interest rates offered on most savings accounts at the moment, these yields seem incredibly appealing.
With that in mind, here are two FTSE 100 dividend stocks I have my eye on right now.
FTSE 100 dividend stocks
Rio Tinto (LSE: RIO) is the world’s largest iron ore producer. Over the past few years, the company has generated vast amounts of cash from its operations. This money has been used to reduce debt, and some of it has been returned to investors.
I reckon this trend is highly likely to continue. Rio has the lowest production costs in the industry, thanks to its economies of scale. This year, the price of iron ore has surged as countries such as China start spending to rekindle economic growth following the pandemic.
All of the figures point to the conclusion that a high iron ore price will only be good news for Rio’s bottom line. Considering the firm’s track record of returning additional cash to investors with dividends, I reckon this means shareholders will see increased returns from this FTSE 100 dividend stock in the years ahead. The stock currently supports a dividend yield of 6.9%, according to the City.
As the world tries to rebuild from the pandemic, I reckon the demand for basic construction materials, such as concrete, steel and aggregates, will rise rapidly.
That’s why I think steel producer Evraz (LSE: EVR) could also prove to be an attractive income investment for the next few years. City analysts appear to agree. After reporting a profit of $326m for 2019, analysts have pencilled in a net income figure of $812 for 2020. The City is projecting further growth in 2021. Analysts expect the firm to report a net income of $957m for the period.
Based on these projections, the FTSE 100 dividend stock looks cheap. For example, it’s selling at a forward price-to-earnings (P/E) of 7.2.
Then there’s the stock’s dividend yield. Based on profit targets for the years ahead, the City’s projections suggest the stock provides investors with a yield of 7.2% for the current financial year.
I reckon there’s a good chance the group will hit this target. For the past three years, Evraz has consistently beaten dividend expectations. Assuming the firm can produce the profits expected for the year, I see no reason why it will miss the City’s targets for the next few years.
Therefore, I’m excited about the outlook for this FTSE 100 dividend stock. With its track record of returning cash to investors, as well as projected profit growth, I think the shares could yield large total returns for investors in the years ahead.
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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.