If dividends started making a comeback in the first quarter of this year, now they are getting bigger. In fact, I think they can get even better for FTSE 100 companies that are looking forward to prosperous times ahead.
#1. Anglo American: dividend stock that also grows
One of them is the multi-commodity miner Anglo American, which released a stellar set of results yesterday. The company’s dividend yield is 7% and its share price is rising too. In other words, it is not just a dividend stock, but a growth one as well. I think the outlook for the company is positive too.
It is a big producer of diamonds, whose demand will increase in the near future as consumer spending kicks in once again. Moreover, with big public spending planned by governments to keep the economy buoyed in the post-pandemic environment, industrial metal prices should stay firm too.
With its prospects looking brighter, the Anglo American share is a dividend stock for me to buy in August.
#2. Royal Dutch Shell: oil price boost
Similarly, the FTSE 100 oil biggie Royal Dutch Shell (LSE: RDSB) is getting its mojo back. Its net profits are up by a huge 150% in the first half of 2021 from the year before, driven by higher oil prices. As travelling becomes easier over the rest of the year and business activity picks up, oil prices are expected to stay elevated. This bodes well for Shell, which could continue to benefit from both an increase in oil demand and oil prices.
It has increased its dividends, which is also an encouraging sign for income investors. But I think there are more such in store. Its dividend yield is still 3.3% and its dividend amount is less than half of what it was last year. It has historically been a big dividend payer and I think that if its run of strong results continues, it may want to increase dividends to past levels too.
#3. British American Tobacco: new categories are promising
FTSE 100 tobacco biggie British American Tobacco (LSE: BATS) is another one with a huge dividend yield of 7.9%. I have been unsure of the merits of the stock in the recent past, because I do not want to earn huge dividends at the cost of my capital. The company’s share price trended downward for a long time. But it seems to have stabilised now.
In fact, with the growth in its revenue from new categories up by 40% in the first half of the year, compared with last year, I think the long-term future may just start looking hopeful. It is a matter of time before tobacco goes out of favour, in fact it already seems to have for investors. But if its still small tobacco alternatives segment continues to grow, as an investor can I end up with another income plus growth stock. It is one for me to consider buying in August.
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Manika Premsingh owns shares of Royal Dutch Shell B. The Motley Fool UK has recommended British American Tobacco. 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.