Trying to get a positive real return from dividend stocks is extremely difficult right now. Inflation is rising at breakneck pace, and on the FTSE 100 there are few stocks that offer yields above the rate at which prices are rising.
Consumer price inflation (CPI) hit an eye-popping 9% in April. That’s the highest for over 40 years and a big leap from March’s figure of 7%.
Finding great stocks that can help take the sting out of this inflationary boom is critical. And with some careful research it can be done.
Should you invest £1,000 in IAG right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if IAG made the list?
Here are two FTSE 100 dividend stocks whose big yields I think could help protect my wealth. I reckon they could deliver massive long-term rewards as well.
Saluting a top income stock
Soaring fuel costs pose a danger to Admiral Group (LSE: ADM) in the near term. Petrol and diesel values hit fresh record highs this week and more pain is expected. This threatens to damage trading at car insurers as people leave their motors parked.
That being said, I still think Admiral is a great buy today. Revenues at general insurance businesses like these tend to be more stable than those of most other UK shares when times get tough (Admiral also offers home, travel and pet insurance).
Brand power
I also like the FTSE 100 firm because of the strength of its brands like Admiral, Diamond and Elephant. These divisions have helped the company carve out the largest market share in the UK car market. And they could help protect earnings at the business even if the broader industry comes under pressure.
Today Admiral carries a forward dividend yield of 8%. This may not keep up with the pace of inflation in the UK. But it significantly reduces the real-term impact of rocketing prices right now.
Another top FTSE 100 dividend share
I also think Vodafone Group (LSE: VOD) is a top FTSE 100 dividend stock for these uncertain times.
This is because, like general insurance companies, trading at telecoms businesses remain largely robust at all points of the economic cycle. Having good communications is a necessity in an increasingly digitalised society.
Vodafone is an especially appealing income stock during this era of high inflation too. Its 6.6% forward dividend yield helps take much of the bite out of soaring CPI.
BIG market opportunities
It’s important to note that intense competition among broadband and mobile providers poses a big threat to Vodafone. This is particularly troublesome today as the cost of living crisis prompts consumers to shop around for the best deal.
However, I still believe Vodafone has plenty of opportunities to generate strong profits growth, both now and in the future. Its robust position in the fast-growing African telecoms market is one. So is the rollout of 5G across the globe. This is a FTSE 100 dividend stock I’d buy today and seek to hold for years to come.
