3 top FTSE 100 dividend stocks I'm buying right now

A person holding onto a fan of twenty pound notes
A person holding onto a fan of twenty pound notes

Making money from stocks is not just about capital gains. Dividends play an outsized role in total market returns. Studies show that over the long term, dividends account for more than half of the market's total return.

But not all dividend stocks are created equal, some have much better income qualities than others. I believe these are the three best income stocks in the FTSE 100 today.

Cash cow

Over the past three years, BP(LSE: BP) has been rebuilding itself. The oil price crash in 2014 forced the company to rethink its operations and slash costs. Today, these efforts are paying off.

With profits surging, management is eager to return as much cash as possible to investors. At the end of last month, alongside its second-quarter results, BP announced its first dividend increase since 2014 as profit quadrupled year-on-year. On top of the dividend increase, the company is also planning to return as much as $6bn to investors via share repurchases.

The market hasn't really reacted to these plans to return additional capital to investors. Shares in BP have only fallen since the announcement. For income seekers, this is good news because the shares currently support a dividend yield of 5.8%.

As BP generates more cash than it knows what to do with, I expect the payout to continue growing, which makes this a perfect stock for income hunters.

Defensive income

GlaxoSmithKline(LSE: GSK) is another name on my list of top FTSE 100 income stocks.

Last year, shares in Glaxo plunged when speculation began to emerge that the company was planning a cut to its dividend payout of 80p per share. Even though management has since stated that it is committed to the distribution, investors have been slow to return.

Over the past few months, sentiment has begun to recover. The stock is up around 28% since the beginning of February. New product launches and better than expected sales growth have helped the company regain investor trust. City analysts now believe the group can achieve EPS growth of 17% for the full year. Based on these figures, the shares are trading at a forward P/E of 14.3, an undemanding multiple in my opinion considering Glaxo's growth potential and defensive nature.

Shares in the company also support a dividend yield of 5.1%.

Change of direction

ITV(LSE: ITV) is the final dividend stock on my list. With a dividend yield of 5.1% at the time of writing, ITV, along with Glaxo and BP, supports one of the best dividend yields in the FTSE 100.

The shares also trade at an attractive multiple of 10.6 times forward earnings, even though City analysts have pencilled in EPS growth of 9% for 2018. In my opinion, this rate of growth deserves a mid-teens multiple at least.

It would appear investors are concerned about what the future holds for the broadcaster. Recently, the group's new CEO, Carolyn McCall, announced plans to spend more on content in an attempt to take on US media giants such as Netflix.

Only time will tell if this strategy will pay off, but I believe it is the right choice for the group. Without spending more on content, ITV risks being left behind. By investing for the future, it will be able to guarantee its dividend for many years to come.

Buy-And-Hold Investing

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Rupert Hargreaves owns shares in GlaxoSmithKline and ITV. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline and Netflix. 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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