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I’d invest my first £500 in this high-dividend-yielding FTSE 100 stock today

first_img Rupert Hargreaves | Saturday, 5th December, 2020 | More on: TSCO Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Tesco. 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. Image source: Getty Images Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Enter Your Email Address “This Stock Could Be Like Buying Amazon in 1997” Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Simply click below to discover how you can take advantage of this.center_img Our 6 ‘Best Buys Now’ Shares If I had £500, or any other amount, to start investing today, I’d buy FTSE 100 stocks. My first preference would be an FTSE 100 index tracker fund. My second preference would be to buy a high dividend-yielding blue-chip stock that could provide me with some certainty in uncertain times. 5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…High dividend-yielding FTSE 100 stock There’s currently a whole range of high-yielding stocks in the FTSE 100. In my opinion, a large number of these should be avoided. A high dividend yield can often be a sign a company’s payout is unsustainable. A sudden dividend cut can produce large capital losses, which may wipe out years of income in a single day. As such, my favourite high dividend-yielding FTSE 100 stock has to be Tesco (LSE: TSCO). This isn’t one of the most exciting businesses in the UK’s leading blue-chip index. Nevertheless, the group provides an essential service for UK consumers. No matter what the future holds for the UK and global economy, consumers will always need food and drink. This has been exceptionally apparent over the past 12 months. Many companies have been forced to close their brick-and-mortar stores in the coronavirus pandemic. Tesco has been one of the few exceptions. The firm has been classed as an essential retailer. Unlike many, this means sales this year have increased. Granted, the company does have some issues. The UK supermarket sector is highly competitive, and Tesco has struggled to stay ahead of the competition in recent years. Still, I think the FTSE 100 group’s size is its main competitive advantage. Its countrywide distribution network, as well as the firm’s Clubcard offering, means it has an unrivalled distribution network and database of customer purchases. This allows management to tailor offers to consumers and streamline stock levels. A long-term dividend championAs long as Tesco can maintain these competitive advantages, I think the company will remain a FTSE 100 dividend champion. And there’s no reason why the business cannot stay ahead of the competition. It already has an enormous lead. Continued investment in the group’s operations will help maintain this advantage. The mistake the business made in the past was to focus on profit over customers. It now seems to have corrected this error. Customer service is a priority for Tesco, and this clearly had a positive impact on the company’s bottom line. Profit margins have expanded rapidly since 2015, and this has helped facilitate dividend growth. Therefore, I reckon as long as Tesco continues to do what it has been doing for the past five years, the group will remain a FTSE 100 dividend champion. At current levels, the stock supports a dividend yield of 4.3%. That’s not the highest in the index but, in my opinion, Tesco’s sustainability it’s worth the trade-off. I’d rather have a 4.3% dividend yield for a decade than an 8% yield for a year. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. I’d invest my first £500 in this high-dividend-yielding FTSE 100 stock today I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. See all posts by Rupert Hargreaveslast_img read more