I believe dividend stocks are the way to go when building a long-term investment portfolio. Dividend payments allow long-term holders to add shares to a bank account without selling them. The FTSE 100 The index returned well last year and the average dividend yield of the index is above 3.5%. However, there are two FTSE 100 dividend stocks that yield much higher yields. I think they also show good growth potential, so I’m considering them for my portfolio.
9.3% yield in housing sector
UK housing giant Persimmon (LSE: PSN) Looks like a bargain to me right now. Home demand continues to rise in the UK driven by the epidemic. Businesses in the UK and abroad are moving to work from home as an alternative to working in the office. This makes living spaces much more important for the young, working population.
Persimmon’s share price reacted badly to the first half (H1) 2021 results published in August. Its shares have fallen 17.8% in the last six months and 7.8% in the last month. Despite a strong showing so far in 2021, I think the cyclical nature of the real estate market has cast a cloud over Persimmon share prices. Silver Lining Hall, it offers an excellent entry point at 2,570p today.
Sales of H1 2021 increased by 9% compared to H1 2019 to £ 2.23bn. Pre-tax revenue also increased from £ 291.4m (H1 2020) to 4 80,480.1m. 32 With a large cash reserve of 1.32bn, its 9.3% is well covered by yield earnings. Also, analysts forecast housing demand to increase by 2023, which I see as another positive for Persimmon.
But, if the market sinks, investors may be forced to leave the country, which is a big concern. There are stages in the house building sector and we are currently finishing up a decade of upward house prices. A dive in the near future will persuade you to withdraw the list of vendors, which could turn Snowball into a long silence.
However, I think the yield of .3..3% dividend can plaster for any fall in share price. Despite a strong negative trend in recent times, I think the FTSE 100 dividend stock has the potential for a good recovery. Given its strong position in the UK housing market and its forecast for sales over the next few years, I expect Persimmon to offer a steady return even in a slight market downturn.
FTSE 100 dividend legend
British American tobacco (LSE: BATS) Looks like an incredible bargain to me right now. Trading 2,520p, shares of the tobacco company have fallen 7.3% in the last 12 months. Its profit-to-earnings (P / E) ratio is 9.3 points which is an underestimated share with growth potential for my long-term portfolio.
Combine this with a .5.5% dividend yield and two decades of stable dividend growth, this stock goes straight to my list of FTSE 100 dividend stocks to buy today.
However, its performance in the market has been weak in recent times. This is despite H1 posted strong revenue figures which rose 8.1% to 1 1.2bn in H1 2021. Also, the company is subject to rising taxes in overseas markets which make up a large percentage of sales. This is a cause for concern in terms of declining global tobacco sales.
However, the history of dividends grows and the current 8.5% yield makes BATS an exciting alternative to fixed passive income. I would definitely consider investing £ 1,000 in BATS shares today to expand my earnings portfolio.
Suraj Radhakrishnan has no position in any of the mentioned shares. Motley Flower UK recommends British American Tobacco. The opinions expressed in the companies mentioned in this article may differ from those of the authors and therefore the official recommendations we make on our subscription services such as Share Advisors, Hidden Winners and Pro. Here at The Motley Flower we believe that considering a variety of insights makes us a better investor.