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Shares to buy: 2 FTSE 100 dividend stocks I’d invest in now

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Dividend stocks can play a valuable role in an investment portfolio. Not only can they potentially provide two sources of return (capital gains and dividends) but they can also provide a degree of portfolio stability.

Here, I’m going to highlight two top FTSE 100 dividend stocks I’d buy now. Both of these stocks have great dividend track records. And while their dividends aren’t guaranteed, I believe that, in the long run, the shares have the potential to provide attractive returns for investors.

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Let’s start with Unilever (LSE: ULVR). It’s a leading consumer goods company that owns a wide range of well-known, trusted brands such as Dove, Domestos, Hellmann’s and Ben & Jerry’s. This stock currently offers a prospective yield of around 3.4%.

I see Unilever as one of the best UK dividend stocks an investor can own. One reason is that the company’s revenues, profits, and cash flows are quite stable. Consumers buy Unilever brands on a regular, repeat-purchase basis, no matter what the economy’s doing. This translates to reliable dividends.

Secondly, with more than 50% of its revenues coming from the emerging markets, Unilever is exposed to one of the most powerful trends on the planet – the rise of wealth in developing countries. Exposure to this trend should boost growth (and help the company pay higher dividends) over time.

Of course, as with any stock, there are risks to the investment case. These days, consumers’ tastes and preferences are changing rapidly (plant-based food is a good example). To stay relevant, Unilever will have to innovate. The stock’s valuation is also higher than that of the average FTSE 100 company.

Overall however, I think Unilever looks very attractive right now. With the share price less than 10% higher than the level it was when Warren Buffett tried to buy the company a few years ago, I think the stock’s worth snapping up today.

A very reliable dividend stock

Another dividend stock I’d buy right now is Smith & Nephew (LSE: SN). It’s a leading medical device company that specialises in joint replacement systems. This company has paid a dividend every single year since 1937, meaning it’s a very reliable dividend payer. Currently, it offers a prospective yield of around 1.7%.

There are a number of reasons I like the look of Smith & Nephew shares at the moment. One is that it’s a reopening play. As the world reopens, and elective medical procedures are resumed, demand for the company’s products should increase significantly. Last month, the company said it’s targeting revenue growth of 10-13% this year, which is very healthy.

Another reason I like SN is that the company’s well-placed to benefit from a number of powerful long-term trends. Not only is it set to benefit from rising wealth in the emerging markets (its EM revenue was up 22% in Q1) but it’s also well-placed to benefit from the world’s ageing population.

In terms of risks, Smith & Nephew does face competition from other medical device players such as Stryker. Its valuation is also higher than that of the average FTSE 100 stock.

However, I’m comfortable with these risks. I think this dividend stock has a lot of potential.

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Edward Sheldon owns shares in Unilever and Smith & Nephew. The Motley Fool UK has recommended Smith & Nephew 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.

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