2 FTSE 100 dividend stocks I’d buy in a Stocks and Shares ISA today

These two FTSE 100 (INDEXFTSE:UKX) dividend shares could offer wide margins of safety and bright growth prospects in my opinion.

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Buying FTSE 100 dividend stocks could prove to be a shrewd move in the long run. Various studies have shown that a large proportion of long-term total returns from investing in the stock market are generated by dividends and their subsequent reinvestment.

Furthermore, stocks that have the potential to deliver rapidly-rising dividends over a sustained period could become increasingly in demand among investors. This may lead to rising share prices that could enhance the total returns on offer.

With that in mind, here are two FTSE 100 stocks that appear to offering improving dividend prospects.

Glencore

The recent performance of FTSE 100 mining company Glencore (LSE: GLEN) has been relatively disappointing. It has suffered from weak investor sentiment due to regulatory risks, as well as the prospect of a general slowdown in the world economy. As such, its shares trade on a price-to-earnings (P/E) ratio of just 7.2, while they offer a dividend yield of 6.2%.

Over the long run, the company could have a bright future. It is ramping-up production of the materials that are used to produce batteries for electric cars. With this likely to be a key growth area for the automotive sector, it would be unsurprising for their prices to rise. This could lead to a tailwind for the business over the coming years.

Since Glencore’s shareholder payouts are currently covered 2.2 times by profit, they seem to be sustainable at their current level. Although there may be more stable stocks available in the FTSE 100 at the present time, the company’s valuation and yield indicate that it offers a wide margin of safety. As such, now could prove to be the right time to buy it.

Fresnillo

For investors who are concerned about the prospects for the world economy given the ongoing trade war between the US and China, gold and silver producer Fresnillo (LSE: FRES) could be a worthwhile investment.

The company could benefit from a rise in the price of precious metals over the medium term. Historically they have shown low positive correlation to the world economy’s outlook, and may even benefit from increased risk-aversion among investors.

This is expected to lead to rising profitability for the business, with Fresnillo forecast to post a rise in net profit of 27% in the next financial year. This is due to catalyse its dividend growth rate, with an increase in dividends per share of 24% forecast for the 2020 financial year.

Although the stock has a dividend yield of just 2.4% at the present time, it offers strong growth potential over the long run. This could mean that an investment today offers a relatively high income return over the coming years as dividends rise. Therefore, with the stock also having defensive characteristics, it could be a worthwhile purchase for income 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.

Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has recommended Fresnillo. 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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