I’m thinking of buying these FTSE 100 dividend stocks. Here’s why I’d hold them for the next decade.
Silver surfer
I think there’s a strong chance gold and silver prices could rise strongly in 2022. There’s a wealth of trouble out there (including, but not exclusive to, military tension in Eastern Europe, soaring inflation, and China’s wobbling property sector) that I believe could supercharge precious metals prices.
I’m not thinking of investing in these metals however. I’d rather put my cash in Mexican mining giant Fresnillo (LSE: FRES), the world’s largest silver miner. This way I can profit from rising gold and silver prices while receiving a dividend in the process. This FTSE 100 firm’s dividend yield currently sits at a chubby 3.3% for this year, by the way.
I wouldn’t just buy Fresnillo to hold it for the short term. I think owning it indefinitely is a good idea to protect myself from unexpected crises that can send markets plunging and safe-havens like gold soaring at a moment’s notice. I’d buy it despite the constant danger of production issues that can hit miners’ profits hard.
A FTSE 100 powerplay
I’d also buy SSE (LSE: SSE) to protect myself from the inflation boom. Electricity is one of the few things we as humans cannot do without, so energy producers — like healthcare stocks and residential landlords, for example — can expect demand for their services to remain strong. Consumers will find other things to cut back on before power.
I also like SSE today because its dividend yield sits at a mighty 5.4%. There aren’t a huge amount of stocks that offer yields close to the current rate of inflation above 5%. This gives me a good chance to make a positive return on my invested cash.
My main concern with investing in SSE is that, like any utility stock, it has a lot of debt on the balance sheet. The cost of servicing this could rise sharply if central banks significantly raise rates.
One final thing. SSE’s focus on renewable energy could provide exceptional long-term returns as the fight against the climate crisis ramps up.
Red alert!
Antofagasta (LSE: ANTO) is expected to endure some near-term profit woes as output slips. Production at the copper miner could fall up to 9% year-on-year in 2022 as a drought in Chile hits its operations. The FTSE 100 firm has said output should steadily improve as the year progresses, though of course earnings could take a heavy whack if these predictions slip.
I’d invest in Antofagasta because of the world-class quality of its Latin American assets. I think they’ll enable the company to make exceptional profits as demand for its red metal rockets. Copper’s excellent conductivity makes it a perfect material for the green revolution where it will be used in huge quantities to build wind turbines and electric vehicles and charging infrastructure.
Antofagasta’s forward dividend yield isn’t as large as SSE’s. But at 3.5%, it still beats the broader FTSE 100 average of 3.2%. I’d buy the miner for strong profits and dividend growth as the decade progresses.