2 FTSE 100 dividend stocks I'd buy and hold for 25 years

The Motley Fool
BHP Billiton iron ore mining
BHP Billiton iron ore mining

There are some some very desirable dividends in the FTSE 100 these days, and I reckon BHP Billiton(LSE: BLT) is one of them.

But first, the 2015 Samarco mine disaster in Brazil has been hanging over the company, and uncertainties always discourage the big investors until after they've been finally settled -- the unknowns from the Deepwater Horizon disaster afflicted BP for much longer...

But it's heading for resolution after a preliminary agreement has effectively finalised the timescale for negotiating a settlement of a claim for 155 billion Brazilian reals ($48.6bn). That's been put at 16 November now, giving BHP a little more breathing space.

I didn't expect the BHP Billiton share price weakness of the past few years to last as long as it did, but oversupply of metals and minerals, coupled with that slowdown in Chinese demand, has taken its toll. And BHP did slash its dividend for the year ended June 2016 after the Samarco tragedy.

A new bull phase?

But 2017's dividend came bouncing part of the way back, and the price slump has provided some nice buying opportunities for long-term investors. In fact, if you'd managed to get in at the worst of the dip in early 2016, you'd have already more than doubled your money with the shares back to 1,372p as I write.

With an 11% EPS rise forecast for the current year, we're looking at a forward P/E of an unstretching 13, coupled with a predicted dividend yield of 4.6%. And with the prices of copper and iron ore creeping back up and steel production growing, I think it's a great time to lock in those future dividends.

An even better 7% yield

I reckon there's an even better dividend to be had at Taylor Wimpey(LSE: TW), where we're seeing total yields of 6.8% and 7.5% penciled in by analysts for this year and next.

The share prices of the UK's top housebuilders slumped after the result of the 2016 Brexit vote, and I banged on about how irrational that was at the time. They've been on a steady recovery since, as investors have come to realise that our chronic housing shortage is actually still with us.

Although Taylor Wimpey's earnings growth of the past few years is set to slow to single digits, forward P/E multiples stand at only 10.5 this year and 9.7 next -- and I reckon that's too cheap, even for something as cyclic as housing.

Buy more land

And even if there should be any short-term weakness in house prices, that's the perfect time for housebuilders to be buying up more land. They did it the last time round, paving the way for the resurgence of the past five years.

Taylor Wimpey's most recent foray into the land market came in August when it bought up a parcel of development land in central London from Royal Mail Group for £190m. That was a deal the company described as "a compelling multi-year development opportunity in a high-quality location."

On top of a first-half performance, described as "very positive, supported by favourable UK housing market fundamentals and good customer confidence", and boasting of a 9.3% rise in completions and a 6.3% rise in the average selling price, I see all the signs as being very positive for Taylor Wimpey. That's another dividend payer that I'd tuck away forever.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended BP. 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.