3 FTSE 100 high yield stocks I'd always buy over Royal Dutch Shell

Royal Dutch Shell(LSE: RDSB) may still be the flavour of the month for many investors given its FTSE 100-smashing 5.2% forward dividend yield, but I for one remain happy to sit back and watch it ascend.

The oil price surge that has driven Shell's recent share price jump stands on shaky foundations due to the threat of swelling crude supply in the years ahead, fears that have gained momentum in recent days as rumours have abounded of a 1m-barrel-per-day production increase by the OPEC cartel.

Against this backcloth, I would be much happier to splash the cash on the three Footsie high-yielders discussed below.

Post gigantic returns

Royal Mail (LSE: RMG) isn't without its risks, either, with the prospect of a protracted economic slowdown in the UK -- allied with the terminal decline in the letters market -- providing plenty for investors to ponder over earnings generation right now.

Britain's oldest courier cautioned last month that letter volumes are expected to drop between 4% and 6% each year over the medium term, and that the dip is likely to hit the higher end of this range during the current year "due to GDPR and, or if, business uncertainty persists."

The news sent Royal Mail's share price into a tailspin from which it is yet to recover. I think many investors are missing the bigger picture here -- the e-commerce phenomenon still offers plenty of earnings upside for the business as more and more shoppers choose to do their shopping online, sending parcel volumes in the UK and across its pan-European GLS division to the stars.

What's more, earnings should receive an extra boost in the years ahead from the Footsie company's successful restructuring drive (it said in May that productivity improvements this year should hit the top end of a guided 2%-3% range).

Royal Mail is expected to endure a 14% earnings decline in the period ending March 2019, reflecting high restructuring costs and the aforementioned troubles in the letters market.

However, thanks to its bright profits outlook over a longer time frame (the earnings fightback is expected to kick off with a 7% rise in fiscal 2020), City analysts are confident that dividends should continue to grow. Thus last year's 24p per share dividend is anticipated to swell to 24.7p and 26.4p for this year and next respectively.

Subsequently-weighty yields of 5% and 5.3% for these years, allied with a low, low forward P/E ratio of 12.9 times, should make investors sit up and take serious notice of Royal Mail.

Picture becoming clearer

ITV (LSE: ITV) has also been under the cosh of late due to the revenues pressures created by constrained spending across the advertising world.

These pressures caused a rare earnings slip in 2017 and another disappointing bottom-line reversal is predicted for the current period, this time by 4%.

However, signs are emerging that ITV can finally be seeing those fabled green shoots of recovery. It advised last month that total advertising revenues were up 3% during January-March from a year earlier, the broadcaster declaring that "while the economic environment remains uncertain online advertising continues to grow strongly." It added that it expects advertising turnover to rise 2% during the first half and that "strong growth" in internet revenues should continue.

But recovering ad revenue was not the only cause for celebration during the first quarter as ITV Studios also kept up its stunning momentum. Revenues here rose 11% (or 9% on an organic basis) during the first quarter, and a packed slate featuring popular titles like The Voice and Queer Eye for the Straight Guy should see the unit continue firing.

Against this backdrop the City is expecting ITV to lift the dividend from 7.8p last year to 8p in the present period. And helped by a 2% earnings rebound in 2019, the full-year reward is expected to advance to 8.4p. Thus this year's dividend yield of 4.5% advances to 4.8% for next year.

When you chuck a mega-cheap forward P/E ratio of 11.5 times into the equation as well, I reckon ITV is a terrific blue-chip to buy today.

Sunny skies ahead

International Consolidated Airlines Group (LSE: IAG) is the third and final FTSE 100 dividend stock I reckon investors should think about buying right now.

Unlike ITV and Royal Mail, the British Airways operator has had no such profits turbulence in recent years, the bottom line swelling by double-digit percentages of late. And City brokers see no trouble on the horizon -- earnings increases of 7% and 6% are forecast for 2018 and 2019 respectively.

Despite this, IAG can be picked up on a bargain-basement prospective earnings multiple of 7.3 times. This makes no sense to me given the rate at which passenger numbers continue to swell -- traffic measured in revenue passenger kilometres rose 10% year-on-year in May, helped by ongoing route expansions and capacity increases (this rose 7.1% last month in terms of available seat kilometres).

And as I noted last time I visited the stock in May, I believe the decision to bolster its position in the fast-growing budget airline segment, and to take a leading position in the low-cost transatlantic segment, will prove significant in driving exceptional profits -- and therefore dividend -- growth in the years ahead.

On a related note, IAG's pursuit of Norwegian Airlines received a boost this week after the Scandinavian company's chief executive Bjorn Kjos told media that he would not stand in the way of any takeover attempt from IAG or any other bidder.

In the immediate term, City estimates point to a dividend of 29 euro cents per share in 2018, up from 27 cents last year and yielding 3.5%. And the readout moves to an even-better 3.9% for next year thanks to a predicted 32-cent reward.

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

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