2 FTSE 100 dividend stocks I'd buy in May

Sales fell by 12% to $5,405m during the first quarter at pharmaceutical giant AstraZeneca (LSE: AZN). But shareholders are focused on the long-term potential of the group's pipeline, which has been rejuvenated since chief executive Pascal Soriot took charge in October 2012.

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Mr Soriot has previously promised that 2017 could be a defining year and recent news on new product development has started to provide some support for this claim.

In recent weeks, AstraZeneca has received full approvals in the US and Europe for its Tagrisso lung cancer medicine and has also launched the product in China. Sales of the group's Lynparza medicine for ovarian and breast cancer rose by 30% to $57m during the quarter and have generated "positive data" so far.

New products like these form the basis of AstraZeneca's valuation, which is very much based on the expected future value of its pipeline. I suspect this long-term view will pay off for patient shareholders.

Is it safe to wait?

AstraZeneca's reported operating profit fell by 12% to $917m during the first quarter, due mainly to a loss of patent protection for the group's Crestor medicine. Mr Soriot expects performance to stabilise during the second half of the year, but AstraZeneca's core earnings per share are still expected to fall by "a low to mid-teens percentage" in 2017.

Buying a stock in the hope that future trading performance will improve always carries some risk. But opportunities such as these can be very profitable. In this case, I think it's credible to believe that AstraZeneca will deliver significant growth from new products over the coming years.

For long-term investors, I think AstraZeneca's forecast P/E of 16 and 4.5% dividend yield remain a decent entry point to this business.

Is this stock about to bounce back?

Shares of engineering support services company Babcock International Group (LSE: BAB) are down by 38% from their 2014 peak of nearly 1,500p. But the group's performance has held up better than many of its outsourcing peers over the last couple of years.

There are several reasons for this. But in my view, the main advantages Babcock holds are that much of its work is highly skilled and in the public sector, principally defence. The barriers to entry for potential competitors are much higher than they are for security guards or cleaners, for example.

I'm beginning to think that Babcock stock could offer a buying opportunity for contrarian investors. The group's third-quarter statement confirmed that full-year results ended on 31 March should be in line with expectations.

That puts Babcock on a forecast P/E of 11.5, falling to a P/E of 10.7 in 2017/18. The group's dividend is expected to rise by 8% to 27.9p for 2016/17, giving a forecast yield of 3.0%. Although this is slightly below the FTSE 100 average, Babcock's dividend has risen every year since at least 1998, so it could be worth accepting a slightly lower yield.

The group's full-year results are due on 24 May, so we'll learn more then. But in my view, Babcock International could be worth considering as a long-term buy.

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Roland Head has no position in any shares mentioned. The Motley Fool UK has recommended AstraZeneca. 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.