2 FTSE 100 high-dividend stocks! Should I buy them?

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Dividend yields for many FTSE 100 stocks have shot through the roof as prices have dropped. This gives investors a chance to supercharge their passive income.

These fallen FTSE 100 stocks all offer yields above the index average of 3.7%. Should I buy them today?

Land Securities Group

Property shares like Land Securities (LSE: LAND) are popular to buy when inflation soars. This is because they have the power to lift rents in line with broader price rises, in turn protecting profits from inflationary pressure.

Still, this is one particular stock I won’t buy as consumer spending sinks. Springboard says that visits to shopping centres and high streets have slumped below pre-pandemic levels again. Footfall in malls was particularly weak, dipping 18.6% last month versus July 2019 levels.

This is particularly worrying for Landsec given the large number of shopping centres within its property portfolio. As the economy sinks it could face a tsunami of tenants struggling to pay the rent and the prospect of empty lots in its shopping centres.

Share Price 711p
Price fall in 2022 6%
Market-cap £5.4bn
Price-to-earnings (P/E) ratio 14.5 times
Dividend yield 5.4%
Dividend cover 1.3 times

It’s an especially concerning situation given the huge amount of debt plaguing the business. Net debt rose by almost a fifth during the 12 months to March, to £4.2bn.

With the company sporting weak dividend cover I think payouts could disappoint over the short-to-medium term. And given the rise of e-commerce and flexible working — casting doubt over future need for physical retail and office space — I think shareholder returns could be weak further out too.

Legal & General Group

Legal & General Group’s (LSE: LGEN) share price has also been driven lower by the worsening economic landscape. Demand for the financial products it sells (such as life insurance and investment services) has a history of shrinking when consumer spending power tightens.

Yet despite the toughening trading landscape, I’m still tempted to buy this FTSE 100 stock. I think its low valuation prices in the rising risks to its earnings. And its large dividend yield could help me to supercharge my passive income.

Share Price 269p
Price fall in 2022 10%
Market-cap £16bn
Price-to-earnings (P/E) ratio 7.8 times
Dividend yield 7.5%
Dividend cover 1.7 times

Unlike Land Securities, I believe Legal & General has a great chance of making this year’s predicted dividend too. Dividend cover is under the widely-accepted security benchmark of 2 times and below. But cash generation remains strong and continues to beat its five-year target.

Legal & General’s a share that’s bought for its dividend income rather than its growth prospects. But that’s not to say that investors should be prepared for dull profits expansion. I think the bottom-line here will grow solidly in the long term as an ageing population drives demand for its pensions and retirement products.

The post 2 FTSE 100 high-dividend stocks! Should I buy them? appeared first on The Motley Fool UK.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Landsec. 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.