Are these the best FTSE 100 dividend stocks to watch in November 2024?

The FTSE 100 may be continuing to underperform international indices, but the index nevertheless has risen by an impressive 8% year to date — and this excludes dividends. Having smashed through the symbolic 8,000-point barrier, the index currently rests on 8,258.64 points.

FTSE 100 macroeconomics

After meeting the Bank of England’s (BOE) CPI inflation target rate of 2.0%, on 2 August interest rates were reduced by 0.25 basis points from 5.25% down to 5%. Despite rising to 2.2% in August, it has since dropped to 1.7% due to lower petrol prices and airfares. At its most recent meeting on 19 September the BOE decided to keep interest rates at 5% claiming that it’s ‘vital inflation stays low.’

Following this announcement, the overall price trend for the FTSE 100 remained stable, maintaining its record highs as the BOE’s decision was widely expected by many investors.

The BOE are next scheduled to meet on 7 November and it’ll be interesting to see if further rate cuts are introduced.

Whilst the UK economy has now entered into a phase where interest rate cuts are likely, their frequency, and the amount by which they’re cut is dependent on inflation. If inflation rises too much, further cuts will be more gradual.

On the other hand, businesses may need a helping hand. Although the Insolvency Service have recently noted that the number of companies declared insolvent in England and Wales in September this year was down 7% year-on-year, company insolvencies remained high, and if more and more businesses struggle to service their debts interest rate cuts are likely to be more frequent.

Then there’s the AI-fuelled surge of the US tech stocks to consider. This may be a sustainable rise given the tech advances at hand or may be a bubble that eventually bursts. If the latter, this excess capital may find itself within FTSE 100 dividend stocks until the storm blows over.

This all makes investing in FTSE 100 dividend stocks complex. In particular, the highest dividend yields can be hostage to economic policy — where individual investment cases and changing financial landscapes can create value traps or payout irregularities.

Best FTSE 100 dividend shares to watch

These shares are the highest yielding on the index with a dividend cover ratio of 1 or higher as of 1 July 2024. They may not be the best investments and the dividends and capital itself are not guaranteed.

1. British American Tobacco

2. HSBC

3. Imperial Brands

4. Land Securities Group

5. Taylor Wimpey

British American Tobacco (Dividend yield: 8.95%)

British American Tobacco saw revenue drop 0.8% during H1 as cigarette volumes in the US, their main market, are down 9% and the company struggles to maintain their market share.

Despite this small single figure revenue drop, no changes have been made to its full year guidance as the company anticipates a stronger H2, where investments made in H1 will begin to pay off as they introduce new or improved new categories products to the market.

However, the FTSE 100 tobacco company will have to pivot fast, having written off £27.3 billion of its US brand portfolio after acknowledging they have ‘no long-term future.’ Compounding the weak combustibles growth, the UK recently announced a ban on disposable vapes which could hit BATS’ long-term ambitions in non-combustible categories — and is also imposing a specific vaping tax as well. This could hit margins if similar legislation is adopted more broadly.

Since announcing their H1 results, BATS share price has increased. We may see further gains from here as their generous dividend of 58.88p per share remains a key attraction.

Our analysts have given the stock a buy rating, with an average price target of 2932p, up 11.44% from its current price.

HSBC (Dividend yield 6.93%)

HSBC Holdings reported strong Q2 results where its underlying revenue increased by 5% year-on-year reaching $16.5 billion. This strong performance was mostly due to the fees charged in the Wealth and Investment Banking parts of the company.

Profit before tax increased by 7% to a total of $8.9 billion, exceeding analyst expectations of $7.8 billion. Net interest remained flat.

On top of this, the company also announced a $3 billion share buyback and will pay an interim dividend of $0.10 per share.

Their current dividend cover ratio is 1.89 and analyst estimates anticipate the dividend yield will increase to 8.0% in the next 12-month period.

With global interest rates seeming to have peaked and the possibility of fresh tensions between China and the US, new CEO Georges Elhedery will face a series of challenges within his first few months of being appointed, and we are yet to see how he intends to generate growth in such a difficult environment.

HSBC currently has a buy rating with an analyst price target of 762p in the next 12—month period, up 12.83% from its current price.

Imperial Brands (Dividend yield 6.64%)

The tobacco company Imperial Brands expects its end of year results to be in line with market expectations. Operating profit is anticipated to grow by around 5-6% year-on-year, whilst net debt is predicted to be at the lower end of the companies of 2-2.5x EBITDA.

Net revenue growth from tobacco and Next Generation Products (NGP) has increased slightly with NGP growth expected to reach between 20-30% due to the large number of new products Imperial Brands have introduced to the market.

Recent updates have seen the company’s market share solidify, with a stronger share performance than competitors British American Tobacco (BATS).

The company has a dividend cover ratio of 1.90. Their total dividend for the year has increased annually since 2021, and with its final interim payment of 54.26p up from 51.82p the year before it’s likely this pattern will continue. It’s worth noting however that this is based upon the company’s overall performance in the coming months, so it can’t be guaranteed.

Despite reporting strong end of year results, increased regulation due to public health concerns poses a potential risk to the tobacco industry as consumers opt for healthier alternatives. This could negatively impact profitability and long-term revenue as future sales are expected to drop.

Land Securities Group (Dividend yield: 6.38)

Real estate company Land Securities Group reported a revenue of £824 million in FY24, up 4% from the year before.

Broadly speaking, the company’s performance has remained stable throughout the past year, and this is expected to continue.

The company has recently paid shareholders a dividend of 9.2p per share. This is up from 9p for the same quarter a year earlier. Land Securities Group currently has a dividend cover ratio of 1.27, and their dividend is expected to grow by a low, single digit percentage within the next year.

Our analysts have placed the stock in a hold position with a potential upside of 3.19% reaching 646p in the next 12—month period.

Taylor Wimpey (Dividend yield: 5.98%)

Residential developer Taylor Wimpey is responsible for building homes for local housing associations and private buyers in the UK and Spain.

The company reported mixed H1 results with revenue down 7.3% to £1.5 billion due to the completion of less homes compared to the year before as well as a 2.7% decrease in the average selling price of houses. Operating profit was also down 22.6%, it did however remain 12% above market expectations.

Taylor Wimpey has a dividend cover ratio of 1.03 and has recently announced an interim dividend of 4.80p per share to be paid to shareholders this month. This payment remains consistent to what was paid out during the same quarter a year earlier.

Our analysts have given the stock a buy rating with an average price target of 173p up almost 10% from its current price.

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