The FTSE 100 took a hammering in the fourth quarter of 2018, and while it has recovered a little in the last week or so, there’s still a lot of value on offer right now, in my view. Here’s a look at two top FTSE 100 dividend stocks I’d buy for 2019 and beyond.
Sleep well at night
With economic uncertainty remaining elevated as we begin 2019, I think it’s a good idea to have a few ‘sleep-well-at-night’ stocks in a portfolio. One classic example of this is Reckitt Benckiser (LSE: RB). The consumer goods company owns a powerful portfolio of health and hygiene brands such as Nurofen, Durex, and Harpic. With these kinds of brands offering enduring appeal, it’s unlikely that sales or profits will suddenly fall off a cliff if the global economy takes a downturn.
Reckitt shares rarely trade cheaply, as the company has an excellent long-term track record (its dividend has been increased nearly 600% over the last 20 years) and investors are fully aware of this. However, right now, the stock is down nearly 25% from its 2017 high (investors have concerns over the group’s recent acquisition of Mead Johnson) and its forward P/E has fallen to a more reasonable 17.1. As such, I think it could be worth a closer look. The shares currently offer a prospective yield of 3% and dividend coverage is expected to be around two times.
Long-term growth theme
One long-term theme I’m quite bullish on is the growth of online shopping, and a simple way to play this theme, in my view, is through packaging companies. When you consider that almost every large online purchase comes in some kind of cardboard box, and that online shopping is becoming more and more popular, it becomes apparent that the world’s packaging companies have strong tailwinds driving growth.
A FTSE 100 company that I like in this sector is Mondi (LSE: MNDI). Spun off from parent company Anglo American in 2007, the group has grown significantly in recent years and now has a market capitalisation of over £8.5bn, but I believe there could be plenty more growth to come over the medium to long term, given online shopping trends. Just recently, the group advised it remains confident that it can continue to deliver an ‘industry-leading performance’ and ‘value accretive growth.’
Mondi shares dipped late last year as investors panicked about slowing global growth and the possibility of a recession. But I think this recent share price weakness has provided an attractive entry point, as I believe the fears of a significant slowdown are overblown. On a forward-looking P/E of 10.4, the shares now offer strong value, in my opinion. With analysts expecting a dividend payout of €0.77 for FY2019, the prospective yield is currently a healthy 3.9%, and dividend coverage is expected to be high at around 2.5 times.