The deadline for using this year’s Stocks and Shares ISA allowance is fast approaching, with the April 5 time limit just over two months away.
I’ve got the builders in so I’m short of readies right now. But if I had £3,000 of investable cash at my disposal, I’d buy these three FTSE 100 dividend stocks while they’re still cheap and offering brilliant yields.
I’ve described these stocks as dividend giants and they are, but in different ways. With wealth manager M&G (LSE: MNG), the reason is plain to see. It offers one of the biggest dividend yields on the entire index, currently 8.75%.
Super-sized income
Normally, when I see a yield that big, I get a bit angsty. First, it suggests a falling share price. Second, it may not be sustainable.
Yet the board is committed to generous shareholder payouts and should generate enough cash to make them. Markets anticipate a yield of 9.24% in 2024.
The share price has actually done okay, rising 11% in the last year. Yet I think the real action will come when interest rates finally fall, at which point stock markets may rally. That happy moment has been delayed but I’m hopeful it will arrive later this year.
I bought M&G in July, September and November (and would like to buy it again). While I wait for the share price to kick on, I’ll keep reinvesting my fabulous dividends.
Diversification is important when building a portfolio, but I’ve already got plenty of that. So I’m doubling down on wealth management with my next stock pick, Schroders (LSE: SDR).
This doesn’t offer the same crazy high yield as M&G but 5.3% a year still sounds good to me. That’s forecast to climb to 5.5%, with cover rising from 1.4 to a more comfortable 1.6.
There’s a giant opportunity here because in contrast to M&G, the Schroders price has fallen 15% in the last year, amid a slide in assets under management. It was a pretty small one, though, from £726.1bn in Q2 to £724.3bn in Q2.
Last year was tough for fund managers generally (unless they went all in on the ‘Magnificent Seven’ US tech mega-caps). I think Schroders should lead the stock market recovery whenever it arrives and wish I could afford to buy them before that happens.
A yield good enough to eat
Now for a different kind of dividend giant, supermarket chain Sainsbury’s (LSE: SBRY). I sold out of the grocery sector years ago, thinking that sector leaders Tesco and Sainsbury’s would be routed by German budget rivals Aldi and Lidl.
They’re still standing. In fact, Tesco shares are up 16.55% over the last year, but I’d prefer to buy Sainsbury’s, whose shares have fallen 10.71% in the last month and look cheap at just 10.1 times earnings. Over one year, they’re up 2.89%. With capital growth sluggish, the board has a giant obligation to keep shareholders happy with a solid stream of dividends.
Sainsbury’s yields a little more than Tesco – 4.85% compared to 3.8% – nicely covered 1.6 times. The dividend per share was held at 13.1p in 2023, so we may not see much growth. But with the cost-of-living crisis hopefully drawing to a close, shoppers could feel a little better off, and Sainsbury’s should benefit. Now where can I find £3k by April?
