Investors are spoilt for choice when it comes to FTSE 100 dividend stocks. Even though the blue-chip index climbed almost 1.5% in February, there are still bargains to be had.
Here are three that an investor might consider adding to their portfolio over the next month. All yield more than 5%. And two are really cheap.
Schroders shares have struggled
Let’s start with the most expensive, investment manager Schroders (LSE: SDR). Its shares have had a torrid time, and although they’ve picked up in recent weeks, they’re still down 4.5% over one year and 26% over five.
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I’d have expected them to be really cheap as a result, but the price-to-earnings ratio of 15.1 is in line with the FTSE 100 average. Profits have been bumpy. Schroders also suffered £2.3bn of outflows in Q3, although assets under management climbed to £663.8bn.
Schroders has been hit by volatile markets, most recently triggered by Trump’s trade tariff threats. As an active fund manager, Schroders also faces the threat from soaring demand for exchange-traded funds (ETFs). Yet with a high trailing yield of 5.78%, income seekers may be dazzled.
Broker RBC Capital Markets reckons Schroders’ new CEO can accelerate growth. Time will tell. While investors wait, at least they have that income.
Rio Tinto has a brilliant yield
The mining sector has had a bumpy few years, as demand from China has plunged. Despite some signs of progress, I don’t expect China to suddenly fly.
The Rio Tinto (LSE: RIO) share price is down 6% over 12 months, but now looks a real bargain with a P/E ratio of just 9.1.
Again, the global slowdown and Trump tariffs are hitting sentiment. On 20 February, Rio Tinto posted its weakest earnings in half a decade. They dropped from $11.76bn in full-year 2023 to $10.87bn in 2024, largely due to lower iron ore prices. Net debt was higher than predicted at $5.5bn.
It’s been a lean few years for Rio Tinto investors. During much of that time, the P/E was low without attracting bargain seekers. However, it operates in a cyclical sector that should swing back into favour at some point. Investors may need patience though. While they wait, Rio’s bumper 6.61% yield may compensate.
The HSBC share price is flying
In contrast to these two strugglers, Asia-focused bank HSBC Holdings (LSE: HSBA) has been bombing it. The shares have rocketed 50% in the last 12 months, and 72% over five years.
This is a trend across the FTSE banks. And like its rivals, HSBC still looks nicely valued trading at just 9.2 times earnings. Investors will be tempted by its 5.7% trailing yield and a further $2bn in share buybacks.
HSBC has exposure to the struggling Chinese economy, while Trump tariffs are a concern. Falling interest rates could squeeze margins too.
Of the three, I consider HSBC the most promising. Even though it shares might slow at some point after a strong run. Rio Tinto could spring a surprise, when global sentiment finally picks up. As for Schroders? It’s been struggling for so long I’m wary of calling the bottom. Great yield though. I’d only consider any of these dividend stocks with a minimum five-year view. These are volatile times.
