Forget a Cash ISA! I’d buy these two FTSE 100 dividend growth stocks right now

I think these two FTSE 100 (INDEXFTSE:UKX) shares could deliver impressive income growth.

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While a Cash ISA may offer less risk than investing in FTSE 100 shares, ultimately its returns seem likely to disappoint. At present, the best interest rates available on a Cash ISA are around 1.5%, which is below the rate of inflation. With interest rates unlikely to rise at a rapid rate, this situation may persist over the medium term.

By contrast, a number of FTSE 100 stocks offer inflation-beating yields and the potential to deliver rising dividends over the coming years. Here are two prime examples that could be worth buying today and holding for the long run.

Informa

Exhibitions, events and publishing company Informa (LSE: INF) released a positive trading update on Friday. It has performed in line with expectations in the first four months of the year, with trading across its brands as anticipated.

The company is expected to post a rise in net profit of 8% in the current year. This could lead to a faster pace of growth in its dividends, expected to be covered 2.3 times by profit in the current year.

Clearly, Informa’s business could be negatively impacted by the escalation of the trade war between the US and China. As a global operator which is also relatively cyclical, its financial performance may have a higher correlation to the macroeconomic outlook than some of its FTSE 100 peers.

However, with the stock trading on a price-to-earnings (P/E) ratio of 15, it seems to offer fair value for money given its track record of consistent profit growth and its improving financial outlook. While its 2.9% dividend yield may be relatively low, dividends could well grow rapidly in the long run.

Carnival

Cruise ship operator Carnival (LSE: CCL) has fallen out of favour with investors over the last year. Its shares have declined by around 19%, with weakness across the travel and leisure industry a key reason for this.

The company could also face increasingly difficult trading conditions. Consumer confidence in the US and other key markets has been weak in recent months, while the impact of tariffs on disposable incomes could mean spending on discretionary items also comes under pressure.

Although the company is expected to post flat net profit growth in the current year, it’s forecast to deliver a rise in earnings of 11% next year. Alongside a P/E ratio of 11.3, this suggests the stock could offer good value for money after its decline in the last 12 months.

Since Carnival currently yields 4%, it has an appealing income return. However, with dividends covered 2.2 times by profit and expected to rise by over 8% next year, its potential to offer an improving income return seems high. As such, it could be worth buying for the long term while investor sentiment towards the company is relatively weak.

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 Carnival. 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.

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