With yields of 7%+, here are two great UK dividend stocks to consider buying now

Despite the growth this year, there are still quite a few high-yielding stocks in Footsie. At times, it feels like the post-2020 stock market crash certification event has been extended indefinitely.

But hey, who's complaining? These low prices mean high returns for experienced investors.

Here are two FTSE 100 companies that continue to deliver excellent returns, even if the index approaches new highs.

HSBC

The UK's central bank, HSBC (LSE: HSBA), currently has a dividend yield of 7%. The share price has been steadily rising since the 2020 market downturn, now up 11.7% over the past five years. It is expected to continue to grow in the coming years, with analysts agreeing that the stock will rise by 22%.

The bank's price-to-earnings (P/E) ratio of 6.9 is below peers Lloyds again NatWest. Furthermore, the shares are undervalued by 58% using the discounted cash flow model.

But it is not without danger. The biggest challenge facing HSBC is related to the instability of the Chinese economy and the increase in trade disputes between China and the US, especially in the field of electric vehicles (EV). These problems are reflected in the forecasts. HSBC's earnings per share (EPS) are expected to continue to rise this year but decline in 2025, followed by a slight increase again in 2026. This could affect dividend payments if cash flow becomes a problem.

However, after divesting its Canadian operations, the bank must have surplus cash available for distribution. Even if the local economy turns sour, it is in a strong financial position to weather the storm.

I have already enjoyed good returns from my HSBC shares and plan to hold them for a long time.

Rio Tinto

Rio Tinto (LSE:RIO) is one of the world's largest mining companies, producing precious minerals such as copper, lithium, and iron ore. These metals are used in many modern industries today, from housing and construction to technology and renewable energy.

With the ever-growing population, the demand for these minerals is unlikely to diminish anytime soon. They are used to make batteries for electric cars, laptops, and cell phones. Naturally, this increases the potential for higher revenues and profits for miners like Rio Tinto.

On the other hand, economic instability can reduce demand for goods and negatively affect returns. Recently there have been trade challenges in China that have adversely affected the company. However, such cyclical risks exist in the commodity market, with political tensions often threatening supply and demand.

Balancing the portfolio with defensive stocks can help reduce volatility during these times.

Still, with a forward P/E ratio of 8.6, the shares seem to offer decent value to me. They trade 33% below fair value based on future cash flow estimates, analysts agree it could rise 24% over the next 12 months.

In terms of returns, any dividend yield above 6% is attractive, especially compared to the FTSE 100 average, which is around 3.5%.

I have yet to add Rio Tinto to my portfolio but I plan to buy stock in the company once I have some money freed up this month.