I’m searching for the best FTSE 100 dividend stocks to buy. Here’s why I think these blue-chip UK shares could soar in value in February.
BAE Systems
BAE Systems (LSE: BA) has significantly outperformed the broader FTSE 100 this month. I think it could continue to perform well in February as well if tensions over the Russia-Ukraine crisis continue. So far in January, it’s risen 9% in value while the Footsie has dropped 1%, due to a recent heavy reversal.
Defence shares like this tend to rise when geopolitical tensions move through the roof. Such scenarios boost expectations that weapons system demand will increase. It’s no surprise then that the prospect of the largest European conflict for decades has pushed the BAE Systems share price to its highest since early 2020.Â
I’d buy BAE Systems because of its critical supplier status with major Western militaries. As a long-term investor, I’m also encouraged by the increasing amount of business it’s doing with fast-growing emerging markets. I think it’s a top buy, even though unexpected project delays can have a massive impact upon earnings.
Today, BAE Systems trades on an undemanding forward P/E ratio of 12.2 times. The defence titan carries a meaty 4.3% dividend yield too. I think it’s a highly attractive buy for me at current prices.
BP
It’s also possible the BP (LSE: BP) share price could ascend if oil prices soar again in February. The oil major’s share price has retreated sharply in recent sessions as crude values have cooled. However, BP stock is still 14% more expensive that it was at the start of January. And a fresh spike could be just around the corner.
Brent oil prices recently hit their most expensive since 2013, at around $90 per barrel. A charge through $100 is expected sooner rather than later by many analysts as signs of tightening supply emerge.
Crude stockpiles in the US recently dropped to their lowest since 2018. Meanwhile, demand expectations have increased given the milder nature of the Omicron strain and the possibility it’ll have a modest impact on the global economy.
Not even the prospect of a February surge for BP’s share price is enough to tempt me to invest however. Nor is the company’s low earnings multiples or large dividend yields. Today the oilie trades on a P/E ratio of 6.8 times for 2022 and carries a 4.3% dividend yield.
I’m not just put off by the threat that soaring inflation poses to energy demand as the year progresses. I’m also concerned about BP’s profits from a long-term perspective as green energy takes off and fossil fuel usage steadily declines.
BP’s share price also faces significant uncertainty as major institutional investors turn away from heavy polluters in their droves. For these reasons I’d rather buy other FTSE 100 shares like BAE Systems today.