With yields at 9%+, I expect even more from these FTSE 100 dividend stocks

I’m looking at two FTSE 100 shares with some of the highest dividend yields, and they still look cheap to me.

I’m always upbeat about the long-term future for the FTSE 100, as the UK stock market has wiped the floor with other types of investment for more than a century.

But right now, the big dividends I’m seeing make me bullish about the short to medium-term too.

Top dividend stock?

M&G (LSE: MNG) might just be my top pick at the moment.

It’s a retail savings and investment manager, and those tend not to be too popular when the stock market is in a bear mood. You know, like the years that followed the 2020 stock market crash.

The M&G price has dropped 7% in the past five years. And it’s even down 8% year to date, despite the outlook turning a bit brighter this year. At least, I think it’s brighter.

Rebuilding

The company went through a tough spell, and it’s been working on a bit of an efficiency drive. A number of our top finance firms have had to do that, with Aviva‘s restructuring possibly the highest profile one.

At half-year results time in September, CEO Andrea Rossi said: “Over the last 18 months, we have made meaningful progress transforming M&G by focusing on our strategic priorities“, speaking of “another resilient financial performance” and adding that “the strong foundations we have built give me confidence in the long-term outlook for M&G“.

Getting there

There’s always risk when a company is having to regroup and refocus. And I wouldn’t just assume things are all fine now. The boss might be upbeat, but they’re supposed to be, as part of the job.

The analysts seem to be on board, though. They have solid rises in earnings per share (EPS) and dividends on the cards for the next few years, with cover by earnings of around 1.3 times. I think that’s enough in this line of business.

Oh, I nearly forgot the forecast dividend yield. It’s up at 9.6%. I’m definitely considering a buy here.

Insurance risk

If I hadn’t already bought Aviva shares, I’d very likely have Legal & General (LSE: LGEN) at the top of my list.

The share price has had a slightly worse five years than M&G, even thought its investment activities are a bit more diverse. Legal & General is into institutional investing, real estate, and other areas.

Another 9%

We’re looking at a forecast dividend yield of 9.2% here. Predicted cover by earnings is lower, however, only reaching around 1.1 times by 2026. That adds risk, and it makes me less confident in the dividend being maintained.

There’s never a guarantee with a dividend, of course, and a company can cut it any time it pleases. But Legal & General looks set for a decade of continuous rises, if it can keep it up this year.

It carries cyclical insurance sector risk. And I think both of these stocks could remain depressed while interest rates stay high.

But both are on my own potential buy list.