2 cut-price dividend giants on the FTSE 100!

At FTSE 100 still offering a cut dividend stock despite the recent rally. As an investor looking to build a portfolio mainly by reinvesting my dividends every year, I am always on the lookout for dividend paying stocks to add to my holdings.

So, these are the two stocks I’m interested in.

Vodafone

Vodafone‘s (LSE:VOD) decline over the past year was halted as UAE telecoms company e& (formerly Etisalat) increased its stake in the London-listed company. This positive news was added when Liberty Global bought a 4.9% stake in Vodafone.

So why is this good news? Well, when a telecom company invests in a competitor, I have to wonder if they’re looking at a bargain. Liberty has a deeper understanding of telecom valuations than I or most private investors.

It is important to note that this may not be the case, as Liberty is a trade buyer – a company that buys another company, usually in the same business. Liberty may be looking for synergy rather than having a financial motive.

The dividend yield currently stands at 8% after a 28% decline in the stock over the past 12 months. Coverage is not good, at 1.25 years ago. The range will remain consistent for 2022, with full-year guidance for adjusted core earnings after rent of €15bn-€15.2bn – the company says core earnings will hit €15.2bn in 2021.

So, the dividend can be cut, and the debt becomes a huge burden. Even so, I recently added Vodafone to my portfolio. We hope to see the efficiency drive produce much needed cost savings.

The Phoenix Group

Another dividend stock I’ve recently topped is The Phoenix Group (LSE: PHNX). The company buys and manages legacy life insurance and closed-end pension funds for new and managed businesses.

Like Vodafone, Phoenix Group has one of the strongest dividend yields in the index, providing 7.8%. Dividend coverage is not always the strongest – last year the report was 1.7 times.

But it doesn’t have 13 years of consecutive payments – that’s impressive. Investors also benefit from consistent dividend growth.

In addition, the company says that 2022 has become the year “strong organic growth” — so dividends should be out of danger in the long run. It is expected to generate around £1.2bn of incremental, long-term cash generation organic new business by 2022.

I think the main concern is that the current negative economic backdrop has proven challenging for some of our Phoenix friends. Analysts at Berenberg recently downgraded fellow insurance Legal & General and M&G from ‘buy’ to ‘keep’.

However, the outlook is positive and Phoenix Group has a track record of smart acquisitions and mergers to continue growing the business. On the same note that Phoenix downgrades peers, Berenberg bumped up the price target on the buy-rated Phoenix Group to 820p – well above the current 640p.