Have a Stocks & Shares ISA? Here are two FTSE 100 dividend stocks I’d buy today

Looking for attractive FTSE 100 (INDEXFTSE: UKX) dividend stocks for your ISA? These yield 6.5% and 4.2%.

| 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.

Owning a selection of dividend stocks within a Stocks & Shares ISA is a great investment strategy, in my view. Your dividends will be tax-free, meaning you could potentially build up a nice little second income stream that’s entirely sheltered from the taxman.

With that in mind, here’s a look at two FTSE 100 dividend stocks I’d be happy to buy for my ISA today.

Legal & General Group

Legal & General (LSE: LGEN) remains one of my favourite FTSE 100 dividend stocks. Not only is the yield here extremely attractive, at around 6.5% (forecast yield for FY2019), but the stock’s dividend coverage ratio is also healthy at 1.9 times, meaning the payout looks sustainable. Furthermore, the group has now registered nine consecutive dividend increases, which shows that shareholders are a priority.

One of the key strengths of Legal & General, to my mind, is its diversified business model. Not only is the company a major player in insurance and investment management, but it also specialises in retirement solutions for individuals and pensions de-risking for corporations.

Additionally, it has ventured into infrastructure investment and retirement living in recent years and announced last week that it plans to build 3,000 retirement homes in city centres across the UK in the next five years.

Overall, the group’s long-term strategy is driven by six global growth drivers, including the world’s ageing population and technological innovation.

Despite the progress Legal & General has made over the last decade, its shares still trade very cheaply as many investors appear to have lumped the stock in the ‘UK domestic stock/Brexit’ basket. Right now, the stock’s forward P/E ratio is just 8.3. I think that’s a bargain. Note that broker Jefferies just raised its price target for the stock to 300p.

Mondi

I also continue to like FTSE 100 packaging stocks at the moment due to the fact that packaging plays an important role in online shopping – if you buy something online, it generally comes in a cardboard box. With e-commerce likely to continue increasing in popularity in the years ahead, demand for cardboard packaging should remain robust, and this should drive growth for packaging specialists.

One stock that I like in this sector is Mondi (LSE: MNDI) – an under-the-radar FTSE 100 stock that was spun off from mining giant Anglo American around 12 years ago. Mondi appears to have plenty of momentum at the moment. Last week, it told investors it delivered a “strong performance” in the first quarter, with underlying EBITDA for the three months up 16% on the same period last year. The company also advised that despite macroeconomic uncertainty, it’s confident it can continue to deliver a “strong and industry-leading performance.”

Mondi’s dividend prospects look appealing. The yield is robust at 4.2% (forecast for FY2019), coverage is strong at around 2.3 times, and the company has now registered nine consecutive dividend increases. With the stock trading on a forward P/E of just 10.2, I see a lot of value on the table 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 Legal & General Group and Mondi. 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

After it crashed 25%, should I buy this former stock market darling in my Stocks and Shares ISA?

Harvey Jones has a big hole in his Stocks and Shares ISA that he is keen to fill. Should he…

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

How’s the dividend forecast looking for Legal & General shares in 2025 and beyond?

As a shareholder, I like to keep track of the potential dividend returns I could make from my Legal &…

Read more »

artificial intelligence investing algorithms
Investing Articles

Could buying this stock with a $7bn market cap be like investing in Nvidia in 2010?

Where might the next Nvidia-type stock be lurking in today's market? Our writer takes a look at one candidate with…

Read more »

Investing Articles

Is GSK a bargain now the share price is near 1,333p?

Biopharma company GSK looks like a decent stock to consider for the long term, so is today's lower share price…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Could December be a great month to buy UK shares?

Christopher Ruane sees some possible reasons to look for shares to buy in December -- but he'll be using the…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Sticking to FTSE shares, I’d still aim for a £1,000 monthly passive income like this!

By investing in blue-chip FTSE shares with proven business models, our writer hopes he can build sizeable passive income streams…

Read more »

Growth Shares

BT shares? I think there are much better UK stocks for the long term

Over the long term, many UK stocks have performed much better than BT. Here’s a look at two companies that…

Read more »

British Pennies on a Pound Note
Investing Articles

After a 540% rise, could this penny share keep going?

This penny share has seen mixed fortunes in recent years. Our writer looks ahead to some potentially exciting developments in…

Read more »