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3 FTSE 100 shares for delicious dividend income

Young brown woman delighted with what she sees on her screen

Habitual Fool readers will know that my wife and I have been on a share-buying spree this month. In brief, we have just invested a lump sum into 10 new UK shares, consisting of eight new FTSE 100 stocks and two new FTSE 250 holdings.

Unfortunately, August has so far proved to be a bad month for British shareholders. Since 31 July, the FTSE 100 has lost 5.5% of its value, while the FTSE 250 has dropped by 6.1%. Hence, I started calling myself ‘the Master of Mistiming’ last week.

Time is on my side

Then again, I’m not spilling tears simply because all 10 shares we bought have already declined. That’s because I’m a veteran value investor with an investing timescale of a decade or more. While my timing may be poor this month, it’s mostly time in the market that counts.

At first glance, our latest family portfolio looks pretty rotten, because 19 out of 20 of our UK holdings have recorded paper losses. But two things have rescued it. First, our US mega-tech holdings have done incredibly well since we bought them during last year’s lows before the November US midterm elections.

Second, we are value, fundamental, and dividend investors — and large cash dividends are reliably flowing into our portfolio. In time, I expect this torrent of cash to wash away the effect of my recent bad timing — fingers crossed.

Three FTSE 100 stocks for delightful dividends

For example, here are three Footsie shares we recently bought for their superior, market-beating cash yields:

Company Sector Share price Market value Dividend yield One-year change Five-year change
Glencore Mining 419.85p £51.9bn 8.7% -14.7% +30.9%
Anglo American Mining 1,968.6p £26.3bn 5.1% -31.0% +25.6%
Hargreaves Lansdown Financial 756.8p £3.6bn 5.3% -17.0% -65.2%

The first thing to note is that all three stocks have lost value over the past year. But these price falls are one reason why the shares ended up on my buy list. However, both mining stocks have increased in value over the last five years.

Second, the above returns exclude dividends, which are hefty from all three firms. Indeed, the average cash yield across the three comes to a tidy 6.4% a year. That’s more than 1.5 times the FTSE 100’s yearly dividend yield of around 4.1%. Nice.

That said, all three businesses face stiff headwinds in the immediate future. Slowing Chinese economic growth has dragged down commodity prices, hitting the current earnings of both miners. Also, volatility in financial markets has made owning financial stocks something of an ordeal this year, as I know well.

Nevertheless, my 37 years as an active investor have taught me that patience, discipline, and a defined strategy can help to produce superior returns in the long run. Let’s hope this proves to be the case with my latest FTSE 100 purchases…

The post 3 FTSE 100 shares for delicious dividend income appeared first on The Motley Fool UK.

Our analysis has uncovered an incredible value play!

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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More reading

  • 4.6% to 8.3% dividend yields! Should I buy these FTSE 100 shares for passive income?
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  • One FTSE 100 stock I’d buy ahead of a bull run!
  • Near 52-week lows, is the Diageo share price dip a buying opportunity?
  • Is Diageo one of the best FTSE 100 value stocks to buy? Here’s what the charts say!

Cliff D’Arcy has an economic interest in all three shares mentioned above. The Motley Fool UK has recommended Hargreaves Lansdown. 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.