Three FTSE 100 dividend stocks have caught my attention lately for the wrong, and conversely, the right reasons. All are not having a great time of late, particularly Unilever (LSE: ULVR) and GlaxoSmithKline (LSE: GSK), whose shares have been two of the FTSE 100’s worst performers this last month.
But these are dividend giants, and with the chance of strong capital growth I thought it was time I had a closer look at these UK portfolio staples.
I am going to look at these stocks as if I was in a casino and I was dealt all three. What share would I hit again (buy more), hold (keep) and fold (sell)?
GSK has been one of the worst performers of the FTSE 100 in the last 12 months, and is trading at a material 25% discount to its peer group. Whilst it has been a disappointment for a fair amount of time now, with a price-to-earning (P/E) ratio (10.8x) and a yearly dividend yield (6.6%), I would not be selling!
It is not just the great income you can get from this stock, but there are catalysts that can get this share price back on track, such as good results on its Covid-19 vaccine candidate, which recently reached phase 2 trials. Therefore Mr. Dealer, I’d hold.
AstraZeneca’s (LSE: AZN) recent results and future guidance were good. A lot of what I think is positive news has been lost around the controversy of the vaccine, particularly with the EU questioning its efﬁcacy in the over 65s and then doing a U-turn and blocking shipments of the vaccine to Australia.
Fourth-quarter pre-tax proﬁt, revenue and core earnings per share rose, and it guided for growth in the low-teens for 2021. Its fourth-quarter proﬁt before tax was $1.17 billion, signiﬁcantly higher than the last year’s $240 million.
Positive news, yes… but I can’t see a catalyst to push the share price up in the near future. I like the stock but it would be my last choice of the three to take a position in right now. Mr. Dealer, fold.
Unilever is one of the world’s largest consumer goods companies (with brands like Ben & Jerry’s, Dove and Vaseline) and has seen its share price drop over 10% since February. Every day, almost a third of the global population (approximately 2.5 billion people) use Unilever products.
I think now is a good opportunity to start a position into a great company that should provide me with dividend income and growth. Unilever shares have been paying dividends since 1929, and it currently offers an attractive combination of dividend yield (3.8% as of March 2021) and dividend growth (a five-year average of 5.3%). Mr. Dealer, I’d buy.
In conclusion, I wouldn’t shy away from looking at adding any of these shares to my portfolio, as I think all offer a good chance of capital growth as well as dividend income. To me the recent declines in the share prices give a great opportunity to start a position or add some more. But when faced with the decision to hit, hold or fold, I would hit Unilever, hold Glaxo and sell Astra.
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Joseph Clark has no position in any of the shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline and 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.