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Two FTSE 100 dividend stocks I’d buy in March

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FTSE 100 dividend stocks play a key role in my investment portfolio. Not only do they provide me with regular passive income, but they also provide my portfolio with a degree of stability.

Here, I’m going to highlight two FTSE 100 dividend stocks I’d be happy to buy for my portfolio today. Both stocks are reliable dividend payers and currently offer attractive yields.

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A top FTSE 100 dividend stock

One FTSE 100 dividend stock that strikes as a buy right now is Unilever (LSE: ULVR). It’s a leading consumer goods company that owns a wide range of well-known brands such as Dove, Persil, and Ben & Jerry’s. Analysts expect a dividend payout of €1.70 per share for FY2021 here. That equates to a yield of a very healthy 3.8% at the current share price. 

There are a number of things I like about Unilever from a dividend investing perspective. Firstly, the company is relatively recession-proof. This is illustrated by the fact that last year, earnings only fell 2.4%. Companies that are recession-proof tend to be reliable dividend payers. Secondly, it has an outstanding dividend track record – it has compounded its dividends by around 8% per year since the early 1950s.

Of course, Unilever is not perfect. One concern I have is that growth has slowed recently. Over the last three years, sales have declined. If growth does not pick up soon, the dividend payout could be reduced. The stock could also be at risk from the shift into more cyclical ‘reopening’ stocks we are seeing right now.

Overall however, I think this FTSE 100 dividend stock looks attractive at present. I think Unilever’s forward-looking P/E ratio of 17.5 is quite reasonable given the company’s track record.

A 4.9% dividend yield

Another FTSE 100 dividend stock I’d snap up today is BAE Systems (LSE: BA). It’s a leading defence, aerospace, and security company. Analysts expect a dividend payout of 24.7p per share for FY21. That equates to a very attractive yield of 4.9% at the current share price.

BAE Systems, like Unilever, is quite a ‘defensive’ stock. Because the company’s revenues are largely government-backed, it doesn’t tend to suffer from sudden sharp earnings contractions. Last year, the company held up pretty well, bar some supply-chain difficulties in the first half of the year. Overall, earnings per share were up 2% for the year, which is an impressive performance, all things considered.

BAE is another company with a solid dividend track record. It’s worth noting that it did postpone its final dividend for 2019 last year due to Covid-19 uncertainty. However, it recently announced that it would pay this dividend (13.8p per share) in the near future, along with a final dividend of 14.3p for 2020. Before last year’s dividend postponement, the company had registered 15 consecutive dividend increases.

One risk here is that US defence budgets could be cut. This could impact BAE’s revenues and earnings. Debt has also increased significantly recently after the group made two key acquisitions last year.

However, with the stock currently trading on a rock-bottom P/E ratio of just 10, I feel that these risks are priced-in. I’d buy this FTSE 100 dividend stock today.

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Edward Sheldon owns shares in Unilever and Diageo. The Motley Fool UK has recommended Unilever. 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.