2 FTSE 100 dividend stocks I’d buy for their BIG yields!

Stock market volatility has driven the yields on many FTSE 100 dividend stocks through the roof. I think these income stocks could be too good for me to miss.

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These FTSE 100 dividend stocks offer yields I find hard to ignore. Here’s why I’d buy them today and look to hold them for years.

National Grid

Dividend yield for this year: 5%

National Grid’s (LSE: NG) ability to continue raising dividends during Covid-19 perfectly illustrated its excellent defensive qualities. Electricity demand remains pretty constant whatever crisis comes down the line. And so the power infrastructure business enjoys excellent profits stability.

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This is why City analysts expect the business to keep growing dividends this year and next too. Forecasters project rewards of 53.2p and 55p in fiscal 2024 and 2025 respectively. As a consequence, yields sit at an excellent 5% for this year and 5.2% for next.

Created with Highcharts 11.4.3National Grid Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

I am concerned about how National Grid’s capital-intensive operations could hit dividend levels in the near term and beyond. I’m also keeping an eye on how climate change could drive the company’s cost base higher.

Last week, the government said network operators must “review their severe weather escalation plans, improve their communications systems, and strengthen their compensation payment mechanisms”. This follows the damage caused by Storm Arwen in the autumn.

All things considered however, not many FTSE 100 firms have the supreme profits visibility of National Grid. The critical role it plays in keeping the lights on, along with its monopoly on maintaining the UK’s electricity infrastructure, make it a top dividend stock to buy.

Barratt Developments

Dividend yield for this year: 7.8%

Barratt Developments (LSE: BDEV) doesn’t have the same non-cyclical qualities as National Grid. In theory, it faces weak sales growth, or even a top-line reversal as economic conditions worsen.

In practice however, housebuilders like these continue to thrive. There simply aren’t enough new homes to go around. And thanks to historically-low interest rates and ongoing government support, demand continues to outpace supply.

In fact, homebuilder Crest Nicholson last week upgraded its full-year earnings forecasts on the back of exceptional trading conditions. Revenues here leapt 12.3% in the six months to April. This follows Barratt’s recent update in which it predicted completions would rise between 4% and 6% this year.

Analysts expect Barratt to grow earnings 22% in the financial year to June. And they predict a 1% rise in the upcoming fiscal year too.

However I think there’s a strong chance profits here could also surprise to the upside. And I don’t think this is reflected in the firm’s low valuation. Today, the business trades on a price-to-earnings (P/E) ratio of just 6.4 times for fiscal 2023.

Regardless, City brokers think these forecasts will be enough to drive dividends sharply higher during the period. Payouts of 39.7p and 46.2p per share are predicted for this year and next respectively. So subsequent yields clock in at a 7.8% and 9.2%.

Demand for Barratt’s homes could come under pressure if the Bank of England keeps frantically raising interest rates. But, as things stand, I think the massive rewards I could receive from owning the business makes it a great FTSE 100 share to buy.

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Royston Wild has positions in Barratt Developments. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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