Have £1k to invest? I’d buy these 5%+ FTSE 100 dividend stocks for my ISA right now

I think these two FTSE 100 (INDEXFTSE:UKX) dividend shares could offer high returns in the long run.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Buying unpopular shares is never an easy task. There are usually risks surrounding them that could mean there are further declines ahead in their valuations.

However, over the long term there is often scope for recovery. And with falling share prices often come higher yields that can prove to be highly attractive for income-seeking investors.

With that in mind, here are two FTSE 100 shares that could deliver high income returns in the long run following their recent declines in price.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

ITV

ITV’s (LSE: ITV) transformation towards being a digital entertainment company appears to be making encouraging progress, according to the company’s most recent results. They showed a rise in online revenue of 18%, which suggests that there may be growth opportunities ahead for the business.

Clearly, as a cyclical business ITV is likely to struggle to produce strong growth while the UK’s economic outlook is uncertain. However, with the company set to reduce its overall costs by £60m in the next three years and it increasing its investment in online growth opportunities, it could become a stronger and more diverse business over the long run.

As the company’s share price has been under pressure in response to its modest near-term growth outlook, ITV now offers a dividend yield of 6.4%. Since it is covered 1.6 times by net profit, its dividend appears to be sustainable at its current level. This could mean that while the company’s share price and dividend growth rate are somewhat disappointing in the short run, its long-term income investing appeal is high.

Therefore, investors who are able to withstand what could prove to be a period of change and risk for the business may ultimately be able to benefit from relatively high rewards.

BHP

The 17% fall in the share price of mining company BHP (LSE: BHP) over the last three months is perhaps unsurprising given the uncertain outlook for the world economy. During that time, the global trade war has continued to intensify, while there have been concerns regarding the growth rates of countries such as China as tariffs begin to bite.

This could be bad news for the wider mining sector, as it is highly cyclical and relies on the capital investment being made by China. As such, should there be further concerns present regarding the global economic growth outlook, BHP’s shares could come under further pressure.

However, the business remains relatively robust. It has a diverse range of operations, while its balance sheet is stronger than many of its sector peers. This could mean that it is better able to overcome wider economic challenges, while a dividend yield of 7% suggests that the stock could produce high income returns. With its dividends being covered 1.5 times by net profit, they could prove to be highly sustainable over the long run.

This AI stock is attracting investors like Michael Bloomberg and Peter Thiel…

Why are these legendary investors, already wealthy beyond imagination, drawn to this opportunity? The allure lies in more than just potential returns; it's a vote of confidence in a company poised for long-term success.

Imagine a revolutionary AI company that's not just participating in the digital media landscape but reshaping it entirely.

Trusted by giants like Amazon, Disney, and Netflix, the company reported nearly £637 million in revenue last year, marking a robust 7.8% growth over three years. Its impressive market reach and spirit of innovation are just the beginning of its story.

Best of all, we’re thrilled to offer you an exclusive glimpse into this game-changing AI investment, absolutely free.

Get your free AI stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. 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.

More on Investing Articles

Investing Articles

Can this FTSE 250 underperformer turn things around in 2025?

After underperforming since its IPO, shares in Dr Martens have finally started to show some life. Is 2025 the year…

Read more »

Investing Articles

Here’s what £20,000 invested in Rolls-Royce shares at the start of 2024 is worth today

2024 was another brilliant year for Rolls-Royce shares, which almost doubled investors' money. Harvey Jones now wonders if the excitement…

Read more »

Investing Articles

Ahead of its merger with Three, is Vodafone’s share price worth a punt?

The Vodafone share price continues to fall despite the firm’s deal to merge with Three being approved. Could this be…

Read more »

Dividend Shares

3 simple passive income investment ideas to consider for 2025

It’s never been easier to generate passive income from the stock market. Here are three straightforward investment strategies to consider…

Read more »

Investing Articles

I was wrong about the IAG share price last year. Should I buy it in 2025?

The IAG share price soared in 2024 and analysts are expecting more of the same in 2025. So should Stephen…

Read more »

Investing Articles

Here’s the dividend forecast for National Grid shares through to 2027

After a volatile 12 months, National Grid shares are expected to provide a dividend yield of 4.8% for the company’s…

Read more »

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.
Growth Shares

2 exceptional growth funds that beat Scottish Mortgage shares in 2024

Scottish Mortgage shares generated double-digit returns for investors in 2024. But these two growth-focused investment funds did much better.

Read more »

Investing Articles

If a 40-year-old put £500 a month in S&P 500 shares, here’s what they could have by retirement

A regular investment in S&P 500 shares could help a middle-aged person build a million-pound portfolio. Royston Wild explains.

Read more »