2 of the best income stocks from the FTSE 100

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It's fair to say that our beloved BT Group(LSE: BT-A) has had a pretty tough year. Shareholders will have watched in horror as their trusted friend has fallen off 15-year highs to shed 30% of its value in just 12 months. The reason? Well, I think investors have been spooked by the group's mounting pension deficit, not to mention the wranglings with Ofcom over the position of the Openreach division within the group.


Only yesterday Ofcom ordered BT to legally separate from Openreach and become a distinct company within the group. But I think the devil will be in the detail, and much will depend on how much control BT will have over Openreach under the revised structure. Watch this space.

EE acquisition boosts revenue

In the meantime, I see the sliding share price as an opportunity for long-term shareholders to build a stake for the future, and I see the recent acquisition of mobile network operator EE as a big part of that future. In its latest trading update, the FTSE 100 telecoms giant reported a positive set of results for the second quarter of its financial year both financially and operationally, as the group looks set to achieve its full year outlook.

BT continues to make good progress on the integration of EE, which should eventually help it achieve considerable cost synergies and cross-selling opportunities over the longer term. In its last completed quarter, the group achieved an impressive 35% rise in revenue, helped of course by the acquisition of EE. There were 280,000 mobile pay monthly net additions, with Openreach achieving 440,000 fibre broadband net additions, the majority of which came from external service providers for the first time. Very encouraging indeed.

A good time to buy

From a valuation perspective, I think this year's share price slide has also increased the firm's appeal to income investors, as well as those seeking value. As always, our overworked friends in the City have been busy formulating their latest projections for BT, and consensus estimates suggest that the group will complete the fiscal year with a significant increase in revenues from £19bn to £24.1bn for the current year to the end of March 2017.

Analysts are also expecting BT to post a £473m rise in pre-tax profits to £3.5bn, with a further improvement to £3.8bn pencilled-in for FY2018. The group's share price underperformance this year has given rise to an inflated dividend yield of 4.3% for the current year, and is forecast to rise to 4.7% for the year to March 2018. BT currently trades on a modest P/E rating of 12, falling to 11 for FY2018, which further strengthens my belief that this could be a great time to buy.

Christmas is coming

Another blue-chip favourite that's looking ever more appealing for dividend seekers is Royal Mail Group(LSE: RMG). The UK's leading postal and delivery services provider announced its interim results earlier this month with one eye on the all-important Christmas period. Revenues for the first six months of the year to 25 September were up slightly, driven by a good performance from its continental European parcels business, GLS.

But quite frankly, Royal Mail's performance for the full year will be highly dependent on the vital Christmas period, and the company has been planning for its busiest period since the spring, with its cost avoidance targets raised in a bid to improve its financial performance. Dividends continue to grow, with the yield now standing at 5% and payouts covered two times by forecast earnings. Royal Mail should continue to appeal to income seekers looking for a relatively safe dividend with a good track record of growth.

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.