Despite the gains this year, there are still a few undervalued high-yield dividend stocks on the Footsie. At times, it feels like the reckoning event from the 2020 stock market crash has been extended indefinitely.

But hey, who’s complaining? Those low prices mean higher dividends for savvy investors.

Here are two FTSE100 companies that continue to pay excellent dividends even as the index approaches novel highs.

HSBC

The largest bank in the UK, HSBC (LSE:HSBA) currently has a 7% dividend yield. The share price has been rising steadily since the market crash in 2020, and is now up 11.7% over the past five years. Further growth is expected in the coming years, with analysts agreeing that the stock will rise by 22%.

The bank’s forward price-to-earnings (P/E) ratio of 6.9 is lower than that of its peers Lloyds AND NatWestMoreover, the stock is undervalued by 58% using a discounted cash flow model.

But it’s not without risks. The main challenge facing HSBC is the slowdown in China and the escalation of trade tensions between China and the US, particularly in the electric vehicle (EV) sector. These issues are reflected in its forecasts. HSBC’s earnings per share (EPS) are expected to continue to grow this year but decline in 2025, before picking up slightly in 2026. This could disrupt dividend payments if cash flow becomes a problem.

But after divesting its Canadian operations, the bank should have a cash cushion to distribute. Even if the local economy takes a turn for the worse, it is in a robust financial position to weather the storm.

I am already enjoying fantastic returns on HSBC shares and plan to hold them for the long term.

Rio Tinto

Rio Tinto (LSE:RIO) is one of the world’s largest mining companies, producing critical minerals such as copper, lithium and iron ore. These metals are now used in most newfangled industries, from housing to technology and renewable energy.

With a growing population, demand for these minerals is unlikely to tardy down anytime soon. They are used to make batteries for electric cars, laptops, and mobile 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 commodities and negatively impact returns. Recently, there have been trade challenges in China that have negatively impacted the company. However, such cyclical risks are inherent to the commodities market, and geopolitical tensions often threaten supply and demand.

Rebalancing your portfolio with defensive stocks can lend a hand reduce volatility during these periods.

Still, with a P/E ratio of 8.6, the stock seems like decent value to me. It’s trading 33% below fair value Based on estimates of future cash flows, analysts agree that they may escalate by 24% over the next 12 months.

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

I have yet to add Rio Tinto to my portfolio, but I plan to buy shares in the company as soon as I free up some capital this month.