The FTSE 100 still offers cut-price dividend stocks despite the recent rally. As an investor looking to build my portfolio mainly by reinvesting my dividends year after year, I’m always on the lookout for dividend-paying stocks to add to my holdings.

So, here are two stocks I’m backing.

Vodafone

Vodafone‘s (LSE:VOD) decline over the past year halted when UAE telecommunications company e& (formerly Etisalat) upped its stake in the London-listed firm. This positive news was compounded when Liberty Global purchased a 4.9% stake in Vodafone.

So, why is this such good news? Well, when telecoms companies are investing in a rival, I’ve got to think they’re seeing a bargain. Liberty has a far deeper understanding of telecoms valuations than me or most private investors. 

It’s worth noting that this might not be the case, as Liberty is a trade buyer — a company that buys other companies, usually in the same business. Liberty might be looking for synergies rather than having purely financial motives.

The dividend yield currently stands at 8% after the stock’s 28% decline over the past 12 months. Coverage isn’t great, at 1.25 last year. That coverage is likely to remain consistent for 2022, with full-year guidance for adjusted core earnings after leases of €15bn-€15.2bn — the company said core earnings came in at €15.2bn in 2021.

As such, the dividend might be set for a cut, and debt is a considerable burden. Despite this, I’ve recently added Vodafone to my portfolio. I hope to see efficiency drives generate the required cost savings.

Phoenix Group

Another dividend stock I’ve recently topped up is Phoenix Group (LSE:PHNX). The company buys out and manages legacy life insurance and pension funds that are closed to new business and manages them.

Like Vodafone, Phoenix Group has one of the strongest dividend yields on the index, offering a sizeable 7.8%. The dividend coverage isn’t always the strongest — last year it reported cover of 1.7 times.

But it does have 13 years of consecutive payments — that’s impressive. Investors have also benefited from consistent dividend growth.

Moreover, the company says 2022 has been a year of “strong organic growth” — so the dividend shouldn’t be in danger any time soon. It expected to deliver around £1.2bn of incremental, organic new business long-term cash generation in 2022.

I think the main concern is that the current negative economic backdrop has proved challenging for some of Phoenix’s peers. Analysts at Berenberg recently downgraded fellow insurers Legal & General and M&G from ‘buy’ to ‘hold’.

However, the forecasts are positive and Phoenix Group has a track record of clever acquisitions and mergers to continue growing the business. In the same note in which it downgraded Phoenix’s peers, Berenberg bumped up its target price on buy-rated Phoenix Group to 820p — considerably above the current 640p.

The post 2 cut-price dividend giants on the FTSE 100! appeared first on The Motley Fool UK.

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James Fox has positions in Phoenix Group Holdings and Vodafone Group Public. The Motley Fool UK has recommended Vodafone Group Public. 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.