15.2% dividend yields! 2 FTSE 100 dividend shares to buy

I believe National Grid (LSE: NG) is of the best FTSE 100 stocks to buy for my portfolio in the current climate. Many dividend-paying stocks face increasing headwinds as Covid-19 cases keep rising and inflation rockets, putting the economic recovery in jeopardy. By contrast, this company’s essential role in making sure the lights stay on brings me peace of mind. Its services are essential at all points of the economic cycle.

Let’s look at the bad stuff before we carry on. National Grid’s operations are highly regulated, meaning that profits are at the mercy of what lawmakers deem acceptable. There’s even talk that its monopoly on running Britain’s power infrastructure could be challenged and that it could be replaced.

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A safer FTSE 100 share?

It’s worth remembering though that talks of such changes are nothing new. And I’m not sure that there’s enough government will to shake up the system. Especially as the problem of soaring natural gas prices (and by extension consumers’ bills) divert ministers’ attention.

Speaking of which, I like the fact that this particular FTSE 100 share isn’t at the mercy of soaring wholesale energy costs. The number of energy providers going bust continues to climb, but National Grid just shifts the power across the country’s pylons and cables. So it will still get paid no matter how bad the crisis gets.

National Grid boasts a 5.6% dividend yield for this fiscal year (to March 2022). This figure marches to 5.7% for next year too. I’m giving this UK dividend share a very close look right now.

15.2% dividend yields

I think Rio Tinto’s (LSE: RIO) 15.2% dividend yields make it a highly attractive dividend stock too. That’s even though its near-term earnings picture remains fraught with danger. Commodities-hungry China’s GDP grew just 0.2% between July and September, the worst third-quarter result on record.

More specifically, Rio Tinto could be hit harder than other FTSE 100 mining stocks if China’s real estate sector melts down. Both Barclays and UBS have warned of contagion in the country’s property market in the wake of Evergrande’s much-publicised travails. Rio Tinto sources more than three-quarters of earnings from the sale of iron ore, a key component in the construction industry.

It’s my opinion, however, that trouble in China is baked into the company’s low, low valuation. City analysts think Rio Tinto’s earnings will soar 75% in 2020, leaving it trading on a rock-bottom forward P/E ratio of five times.

In fact, I think there’s a lot to get excited by at this FTSE 100 stock. Rising infrastructure spending across developed and emerging markets over the coming decade should deliver mighty profits here. Massive investment in renewable energy sources and other green technology should supercharge demand for its copper as well.

It’s important to note that Rio Tinto’s 15.2% dividend yield reflects the payment of special dividends in 2020. But the miner’s bright cash flows and solid long-term outlook mean brokers believe dividends will remain huge if still down from this year’s levels. As a result Rio Tinto sports a 9.5% yield for next year.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays and National Grid. 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.

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