Forget Cash ISAs! I can get 6% a year from these two income stocks

At FTSE 100 is crammed full of income stocks that offer sky-high dividend yields that thrash back on cash.

I would rather buy them to build retirement wealth than save into a Cash ISA, even though the Bank of England has just raised the base rate to 4%. Why put up with a little over 3% in easy access when I can double from the top dividend stocks like these two.

Dividend stocks for me

An investor in a Chile-based copper mining group Antofagasta (LSE: ANTO) has enjoyed a lot of growth lately. The share price has increased by 27.14% in 12 months, and 87.78% in five years. But it still trades at an undemanding 14.9 times earnings.

There may be more to come, as investors expect that demand from China, the world’s biggest copper importer, will take off now that the country is freed from the lockdown. Second-guessing commodity price movements is difficult, as a global recession could dampen demand from elsewhere. Also, copper prices have risen 19.5% in a year, and will have to work hard to climb higher.

Last month, Antofagasta reported a 10.4% drop in output to 646,200, mainly due to lower ore grades and drought. However, expect this to recover between 670,000 and 710,000 tonnes by 2023.

It’s the income I’m after, though. Currently, the stock is yielding an impressive 6.7%, but that’s just one time with earnings. On closer inspection, Antofagasta’s dividend history is a bit bumpy. It pays a dividend per share of 44 US cents in 2018, which drops to 18 cents in 2019, then increases to 55 cents in 2020 and $1.43 in 2021.

Another concern is that Antofagasta generates its income in US dollars. As the Fed slows and eventually reverses interest rate hikes, the greenback will fall from its current highs and this could hurt profits.

I would invest in Antofagasta instead of a cash ISA, but I think there is a safer dividend yield in the FTSE 100. Like this.

Platinum investment

Anglo American (LSE: AAL) is another mining company listed on the FTSE 100 but with greater diversification as it produces platinum, diamonds, nickel and iron ore. It is the world’s largest producer of platinum, with around 40% of world output, and owns the world’s largest diamond company De Beers Group.

The company’s stock price has barely risen in the past year, rising just 1.7%, but has risen 100.41% over five years. Anglo American shares, however, are cheaper than Antofagasta, trading at just 6.5 times earnings.

The dividend also looks healthier. Yield 6.9%, guaranteed 2.5 times earnings. Payouts are also smoother, with dividends per share set at $1 in 2018, then $1.09 in 2019, $1 in 2020 and $2.89 in 2021.

Today’s Q4 figures show copper production rose 52% to 244,000 tonnes after ramping up at the Quellaveco mine in Peru. Total production in the portfolio increased by 10%.

Again, investors like me have to balance the Chinese outlook with fears of a global recession and a weaker US dollar. However, I found Anglo American’s low prices and high yields tempting. I will buy it when I have money to spare.