2 FTSE 100 stocks yielding 6.7% and 7.8% I’d buy in an ISA today

With their shares trading 23% and 29% below their recent highs, these two FTSE 100 stocks now offer spectacular dividend yields.

| 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.

When share prices fall, dividend yields rise. It’s good news for buyers, because it means you’re getting more income-bang for your buck. And for investors buying in a Stocks & Shares ISA, it also means more income protected from tax.

Advertising giant WPP (LSE: WPP), which announced its annual results this morning, is one company sporting a significantly higher yield than in the recent past. Fellow FTSE 100 media firm ITV (LSE: ITV) is another.

I believe the market’s presenting investors with two good opportunities here to buy high passive income flows, as well as long-term capital growth.

Big faller

On another day when markets have slumped, WPP’s the biggest faller on the FTSE 100. It’s currently trading at around 770p, down 15% on the day. I’ll come to the meat of its results shortly, but for starters, let’s chew on the dividend.

In line with City analysts’ expectations, the board maintained the payout at 60p. As recently as December, WPP’s shares were making a 52-week high of 1,077p, which gave a yield of 5.6%. With the share price now some 29% lower, buyers today are picking up a yield of 7.8%.

Substantial progress

Chief executive Mark Read, who’s been in the job less than 18 months, reminded us that 2019 was “the foundational year for the new WPP strategy.” The nub of it is to create a simpler structure with fewer, stronger agency brands. In the process, it aims to reduce debt by asset disposals.

Read said the company had made substantial progress during the year, and achieved its restructuring targets. He also reported year-end net debt down to £1.5bn, from £4.3bn at the start of the year.

Looking ahead, he expects to see a similar top-line and operating profit margin in 2020, before a return to growth in 2021. However, we should note the 2020 guidance is prior to any impact from the coronavirus outbreak, it being “too early to predict the full potential impact.” We’ll get an update in the Q1 results (late March/early April).

Of course, dividends are never guaranteed. However, City analysts currently expect WPP’s 60p payout to be maintained in 2020 and 2021, with a potential return to growth thereafter.

Similar proposition

Over at ITV, we’re looking at a similar proposition. The company’s expected to maintain its 8p dividend when it announces its results a week today. An 8p payout is also expected for 2020, before a return to growth in 2021.

Like WPP, ITV’s shares were making a 52-week high as recently as December. At 156p, they offered a yield of 5.1%. Today, with the share price some 23% lower at around 120p, buyers can bag a yield of 6.7%.

Executing its strategy

ITV isn’t undergoing WPP’s extent of change. Two years on from her appointment as chief executive, Carolyn McCall told us in a Q3 update that the company’s making good progress in executing its strategy of “building a digitally led media and entertainment company to create a stronger, more diversified and structurally sound business.”

I think the immediate high income makes ITV and WPP particularly attractive stocks to buy today. But I also believe both companies are following appropriate strategies, and have prospects of delivering medium-to-long-term capital growth for investors.

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.

G A Chester 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

US Stock

The Nvidia share price falls! Here’s what I think happens next for the S&P 500

Jon Smith reviews the overnight results from Nvidia and explains why this could stall the S&P 500 performance through to…

Read more »

Investing Articles

Down 15% today, is this FTSE 100 share too cheap for me to miss?

JD Sports' share price has tanked after the FTSE 100 share released another profit warning. Is this the opportunity I've…

Read more »

Investing Articles

Up 8% today, is this FTSE 100 growth stock a slam-dunk buy for me?

Halma's share price is soaring thanks to another headline-grabbing trading update. Is the FTSE 100 stock now too good for…

Read more »

Investing Articles

With a P/E ratio of just 10.5 is now a brilliant time to buy a cut-price FTSE 250 tracker?

Harvey Jones says a recent dip in the FTSE 250 leaves the index trading at bargain levels. One stock in…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

To build a passive income flow, I’d follow this Warren Buffett approach

Warren Buffett has set up passive income streams most people can only dream about. Our writer sees some practical lessons…

Read more »

Growth Shares

As the boohoo share price falls, could it become a penny stock in 2025?

Jon Smith outlines some of the recent problems involving the boohoo share price and considers if things could get even…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

Here are the worst-performing FTSE 100 shares over the last 5 years

These five FTSE 100 shares have been complete duds over the last half decade. But is there potential for a…

Read more »

Investing Articles

Nvidia stock has tripled this year! Can it keep rising?

Nvidia's latest sales update showed strong growth and the stock's been on a tear so far in 2024. So is…

Read more »