FTSE 100 dividend stocks play an important role in my investment portfolio. Not only do they provide me with regular passive income but they also add a degree of portfolio stability.
Here, I’m going to highlight two FTSE 100 dividend stocks I see as attractive at present. I’d be happy to buy both as we begin September.
A top FTSE 100 dividend stock
One dividend stock that strikes me as a ‘buy’ right now is Smith & Nephew (LSE: SN). It’s a leading healthcare company specialising in orthopaedic implants and advanced wound management solutions. Its share price has pulled back recently and I think this has provided a great buying opportunity.
Smith & Nephew struggled during Covid-19 last year due to the fact that so many elective medical procedures had to be postponed. However, it’s now making a strong recovery. For the six-month period to 3 July, revenue was up 28%. For the full year, the group expects revenue growth of 10-13% (I think there’s a good chance it will exceed this). If revenues and profits continue to rebound, its share price should too.
Smith & Nephew isn’t the highest-yielding stock in the lead index. Currently, the prospective yield here is only around 1.8%. I still see appeal in that yield however. This is a company with an excellent long-term dividend growth track record and I expect its dividend payouts to continue rising over the long term as profits expand.
One risk to consider here is further Covid-19 setbacks. If the Delta variant results in a high level of hospitalisations, Smith & Nephew could be disrupted again.
But I’m comfortable with the risks. With the stock trading at 19 times next year’s earnings (versus 27 times for US rival Stryker), I see value here.
Attractive dividend yield
Another FTSE 100 dividend stock I like the look of right now is Unilever (LSE: ULVR). It’s a leading consumer goods giant that owns a wide range of brands such as Dove, Domestos, and Hellmann’s. Its share price has also pulled back recently (mainly due to concerns over higher input costs) and I see this as a good opportunity to build a position.
Unilever’s recent half-year results were quite solid, in my view. For the six months to 30 June, sales were up 5.4%. E-commerce sales jumped 50% while sales in the emerging markets were up 8.3%. These figures suggest to me the company’s heading in the right direction, despite the fact that inflationary pressures are impacting profits.
At present, Unilever shares offer a prospective dividend yield of around 3.7%. That yield’s very attractive, in my view. By contrast, the median forward-looking dividend yield across the FTSE 100 index is around 3.2%. It’s worth pointing out that a yield of 3.7% is quite high for Unilever.
The key risk here, in my view, is that inflation could continue to be a problem for the company. It’s worth noting that last week, analysts at JP Morgan downgraded the stock to ‘underweight’ on the back of inflation concerns.
The contrarian in me sees an opportunity here however. With the stock currently a little bit out of favour and trading on a forward-looking P/E ratio of under 19, I think it’s a good time to be buying.
