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.
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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.
