2 FTSE 100 dividend stocks I’d buy for my ISA today

Edward Sheldon highlights two FTSE 100 (INDEXFTSE: UKX) dividend stocks that he would buy before the ISA deadline.

| 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.

With the ISA deadline just two weeks away now (April 5), today I’ll be looking at two FTSE 100 dividend stocks that I’d buy for my ISA right now. Both stocks have excellent dividend track records and could offer a nice mix of capital growth and income going forward, in my opinion.

Strong competitive advantage

A consumer goods company that owns a portfolio of health and hygiene brands, Reckitt Benckiser (LSE: RB) is certainly not the world’s most exciting stock. But that doesn’t bother me as the company has an incredible track record of generating shareholder wealth. Indeed, according to a recent article in Money Observer, had you invested just £100 in Reckitt when the FTSE 100 was created back in 1984, that investment would now be worth over £10,000, which is an incredible return. Looking ahead, I think there could be further gains to come.

The strength of Reckitt lies in the power of its brands. Names such as Nurofen, Dettol, and Strepsils are trusted by people all over the world, and this provides the group with a strong competitive advantage, which translates to consistent revenues and profits. With talk of the global economy slowing down, and Brexit casting doubt on the strength of the UK economy, Reckitt is the ideal stock to own in my view, as it could offer some protection in a downturn due to the nature of its business.

Given Reckitt’s excellent long-term track record, the stock rarely trades cheaply. Right now, it’s trading on a forward P/E of 18.6 and sporting a dividend yield of around 2.8%. However, the way I see it is that like many things in life, you get what you pay for. For a business of Reckitt’s quality, I think the valuation is fair. With CEO Rakesh Kapoor recently telling investors that the group is “well positioned for long-term, sustainable growth,” I think now is a good time to be accumulating the shares.

Contrarian buy

Another FTSE 100 dividend stock that I’d buy for my ISA right now is defence giant BAE Systems (LSE: BA). Its share price took a hit late last year and at present, with the stock trading on a forward P/E of just 10.9, I see a lot of value on the table.

One of the reasons that BAE’s share price has declined recently is that there’s uncertainty over its relationship with Saudi Arabia (where it generates a large proportion of sales) after journalist Jamal Khashoggi was killed in October. Just recently, the group warned that the “current German government position on export licensing may affect the Group’s ability to provide capability to Saudi Arabia, which may have a consequential impact on financial performance and relationships.”

However, the general consensus among my Fool colleagues is that there is likely to be a pragmatic outcome to this issue and that after the recent share price dip, the shares are an attractive ‘contrarian’ buy.

BAE Systems has a good dividend growth track record and the stock currently offers a prospective yield of a healthy 4.8%. That yield and the stock’s low valuation are hard to ignore right now.

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.

Edward Sheldon owns shares in Reckitt Benckiser and BAE Systems. The Motley Fool UK has no position in any of the shares mentioned. 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

Here’s what £20,000 invested in IAG shares at the start of 2024 would be worth today

IAG shares smashed the FTSE 100 in 2024, and Harvey Jones is kicking himself for squandering this buying opportunity. But…

Read more »

Investing Articles

BP shares are forecast to return 30% in 2025 – and they’re filthy cheap with a P/E of 5.8!

Harvey Jones bought BP shares twice in the autumn and after a bumpy start he expects great things in the…

Read more »

Investing Articles

At a P/E ratio of 8, are shares in this FTSE 100 winner unbelievable value?

3i is a top-performing UK stock that trades at a P/E multiple of 8. Should value investors be snapping up…

Read more »

Investing Articles

Best British growth stocks to consider buying in 2025

We asked our freelance writers to reveal the top growth stocks they’d buy in 2025, which included two 'Fire' recommendations!

Read more »

Passive income text with pin graph chart on business table
Investing Articles

2 shares to consider for turning an empty ISA into a £31,301 a year passive income machine

Earning passive income doesn’t take huge amounts of cash to start with. Investing in great companies consistently over time can…

Read more »

Investing Articles

What £20,000 invested in BT shares at the start of 2024 is worth now…

BT shares enjoyed a solid 2024, Harvey Jones discovers, especially once the bumper dividend is taken into account. So should…

Read more »

Investing Articles

The Lloyds share price could hit 80p in 2025!

The Lloyds share price could push as high as 80p in 2025, according to one highly respected analyst. Dr James…

Read more »

many happy international football fans watching tv
Investing Articles

This FTSE 250 stock offers no passive income but looks 42% undervalued to me!

Our writer has found one stock that he thinks could take off in 2025, even though it doesn’t offer the…

Read more »