A top FTSE 100 income stock that I would buy for 2019 is the global mining giant BHP (LSE: BHP).
After cutting its distribution to almost zero in 2016, this mining behemoth has since become an income champion as cost-cutting and debt reduction efforts have started to bear fruit.
City analysts expect the company to distribute a total dividend of $1.35 per share for its 2019 financial year, giving a dividend yield of 5.7% on the current share price.
However, I think there’s a good chance the company could beat this forecast. You see, BHP has prioritised shareholder returns over capital spending during the past few years. As a result, a record $17bn was returned to shareholders in its 2019 financial year, excluding the final dividend payout of $0.78. That’s a total dividend yield of more than 25%.
I think it is unlikely that the company will be able to repeat this performance. Still, considering the fact that last year BHP generated total free cash flow from operations equivalent to 14% of its market capitalisation, I do not think it is unreasonable to say that investors could receive a double-digit dividend yield next year despite City projections.
Depressed price
Sticking with the mining sector, another FTSE 100 income champion that I would buy for 2020 is Glencore (LSE: GLEN). Legal and operational issues have weighed on this company’s share price over the past 12 months. Nevertheless, as a long term investment, I continue to see value here.
As the world’s largest commodity trader, Glencore occupies a unique position in the global economy and is likely to remain a key global player for many years to come.
Looking past its short-term legal and operational issues, I think this business has a bright future over the next three or four decades. With this being the case, I believe that if you are looking for an income investment to buy and forget, Glencore ticks all the boxes.
At the time of writing, the stock supports a dividend yield of 5.7% and trades at a forward P/E ratio of just 13, slightly below its five-year average.
These metrics suggest to me that the Glencore share price offers the potential for income and capital growth over the long term.
Inflation-busting dividend
Finally, I would buy the National Grid (LSE: NG) share price as an income investment for 2020. Now that Jeremy Corbyn’s nationalisation plans have finally been put to bed, utility providers once again look attractive as income investments.
Shares in National Grid currently support a dividend yield of 5.2%, and the payout has a track record of growing in line with inflation every year.
Unfortunately, as a growth investment, this stock does not look particularly appealing. Thanks to strict regulations regarding how much National Grid can charge customers, earnings per share have grown at a compound annual rate of just 1.9% for the past six years.
As regulators have started to take a more robust line towards utilities, this is unlikely to change. Still, with dividend cover of 1.2 times, it looks as if National Grid’s dividend is here to stay and management has plenty of headroom to increase the payout in the years ahead.
