The Motley Fool

£3k to invest? I’d buy these FTSE 100 dividend stocks

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Private investor buying UK shares at home
Image source: Getty Images

A large number of FTSE 100 dividend stocks have had to cut their payouts this year. However, others have stood firm. And it’s these businesses that I think could be worth buying for 2021. 

I reckon if a company has managed to navigate the pandemic and keep its dividend intact, it’s a great sign. With that in mind, here are two FTSE 100 dividend stocks I’m eyeing up right now. 

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

FTSE 100 dividend stocks

United Utilities (LSE: UU) is the first company on my list. This water business has been a dividend stalwart for some time. I think this is going to continue. 

The supply and disposal of water is one of the most defensive industries you can get. In the UK, this industry is highly regulated. That’s both a benefit and a drawback for companies like United.

It’s a benefit because it’s challenging for new companies to break into the sector. On the other hand, regulators control the billing system. This means United can’t make excessive profits. 

As such, the company may not be the most prosperous FTSE 100 dividend stock. Nevertheless, I think its dividend is exceptionally sustainable. In my opinion, that’s what matters. Investors can buy the stock safe in the knowledge it will still be distributing profits 10 years from now. 

At the time of writing, shares in the utility provider support a dividend yield of 4.5%. That looks extremely attractive to me in the current interest rate environment.

Takeover potential

Severn Trent (LSE: SVT) exhibits similar qualities to United. This is one of the reasons why I believe this company is one of the best FTSE 100 dividend stocks to buy now. 

Severn’s business model is a bit more profitable and efficient than its peer. That’s why the business has historically traded at a premium. It’s also been subject to several takeover rumours in the past. 

None of these rumours has materialised into concrete action, but there’s still time. Severn is a profitable, predictable business, which could fit nicely into another conglomerate or Sovereign Wealth fund. 

In the meantime, the stock supports the dividend yield of just over 4%. 

Recently, investor sentiment towards the business has deteriorated as analysts have become concerned about regulator plans for the sector. As mentioned above, I’m not too worried about these threats. The regulator may decide to reduce the amount of profit water companies are allowed to earn, but that won’t remove their defensive qualities. Severn will remain one of the UK’s most crucial water groups. 

Therefore, I’m interested in buying this company as a part of a diversified basket of FTSE 100 dividend stocks. Combined with other defensive income investments, I reckon Severn and Untied can provide investors with a steady income stream for many years to come, just as they’ve done in 2020. 

There’s a ‘double agent’ hiding in the FTSE… we recommend you buy it!

Don’t miss our special stock presentation.

It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about.

They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market.

That’s why they’re referring to it as the FTSE’s ‘double agent’.

Because they believe it’s working both with the market… And against it.

To find out why we think you should add it to your portfolio today…

Click here to get access to our presentation, and learn how to get the name of this 'double agent'!

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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.