2 excellent FTSE income stocks that aren’t BT Group or Vodafone

There are some eye-catching earnings shares on the FTSE 100 right this moment, together with telecoms titan BT Group and cell phone big Vodafone. They provide unimaginable yields of seven.06% and a staggering 11.09% respectively.

But their share costs have been crashing for years. Buyers who grabbed these falling knives have the scars to indicate. Their sky-high dividends can’t compensate for that. I’d somewhat take a barely smaller yield within the hope of bagging some capital progress as nicely.

Two strong yielders

I bought my small stake in mining big Rio Tinto (LSE: RIO) six months in the past, as a result of I wanted some money, once I would a lot somewhat have held onto it. Fortunately, I haven’t missed a lot. The inventory is down 12.78% over the past yr, as buyers fret over the influence of the struggling Chinese language financial system on demand for metals and minerals.

Right this moment, Rio’s low-cost because of this, buying and selling at simply 8.67 instances earnings. It’s forecast to yield 7.4% in 2024, coated 1.7 instances by earnings. In contrast, Vodafone’s yield has cowl of simply 0.8 instances.

Like several inventory, Rio isn’t excellent. Underlying EBIDTA earnings fell 9% to $23.9bn final yr as copper, aluminium, diamonds and industrial metallic mineral costs all fell. But because of its strong stability sheet, Rio was nonetheless in a position to hike its remaining dividend from 3.7 cents a share to to 4.2 cents, distributing 60% of its earnings for the eighth yr in a row.

If the US slips into recession or the greenback loses a few of its power, earnings might sluggish. I’m not anticipating the share worth to all of the sudden rocket. China is displaying indicators of life however financial issues are removed from resolved, and it’s loopy progress interval is over both method. Commodity shares are cyclical, so I like to purchase them after they’re down and I’m eager so as to add Rio to my portfolio when I’ve the money. This time, I gained’t promote.

Dwelling enchancment retailer Kingfisher (LSE: KFG), which has extra 1,300 shops in 9 European international locations, has struggled currently because the slowdown hits gross sales at manufacturers together with B&Q, Screwfix, Castorama, Brico Dépôt and TradePoint.

Getting out of a repair

But I believe it appears ripe for a restoration when inflation peaks, rates of interest fall, customers have extra to spend and the housing market recovers (assuming all that really does occur!). The method might have began with the Kingfisher share worth up 5.42% within the final month, though it’s nonetheless down 18.6% over the yr. Buying and selling at 7.7 instances earnings, the inventory nonetheless appears low-cost.

Brokers have obviously completely different views forward of full-year outcomes due on 25 March. JP Morgan has put Kingfisher on a unfavourable catalyst watch, warning that earnings expectations look overly optimistic, whereas prices stay excessive. Citi, against this, reckons it’s “nicely positioned to profit from a restoration within the UK housing market”.

That’s my place too. I’d somewhat purchase Kingfisher whereas there’s nonetheless threat on the desk, as its shares are cheaper because of this. Plus I get a better yield of a forecast 5.2%, with midway respectable cowl of 1.7 instances earnings. It’s on my watchlist however I’d purchase Rio Tinto first. And I’d purchase each of them earlier than BT Group and Vodafone.