£1,000 to invest? 2 FTSE 100 shares I’d buy in an ISA

These two FTSE 100 stocks could provide ISA investors with a perfect blend of income and capital growth over the long run.

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If you have £1,000, or any other amount, to invest in an ISA, I think the best course of action could be to buy a basket of FTSE 100 stocks. 

With that in mind, today I’m going to outline two blue-chip stocks that could be perfect for ISA portfolios of any size. 

FTSE 100 income

Telecommunications group Vodafone (LSE: VOD) is one of the FTSE 100’s most reliable income stocks.

The group is one of the world’s largest telecoms businesses, with operations around the world. It is also one of the most integrated international companies.

For example, the organisation’s users in the UK can access its network across Europe for free. Many of its mobile phone contracts for UK customers come with access to more than 80 different markets as standard. 

International diversification is Vodafone’s most significant competitive advantage.

The FTSE 100 company has also come into its own in the coronavirus crisis. Management’s focus on building a high-quality data network around the world has helped its customers stay connected in uncertain times. 

This will translate into profits next year, forecasts suggest. City analysts are expecting the group to report net income of €1.8bn in 2021. It lost €920m in 2020. Earnings will expand nearly 40% in 2022, according to analysts. Based on these projections, the stock is trading at a forward price-to-earnings (P/E) multiple of 13.4. 

In addition, the income stock currently supports a dividend yield of 7.4%. That’s double the FTSE 100 average and extremely attractive in the current interest rate environment.

The dividend is backed by stable cash flows from Vodafone’s telecoms network. Therefore, I reckon investors can depend on this income stream in uncertain times. 

WPP

I’m also interested in marketing giant WPP (LSE: WPP). The world’s largest advertising group by sales recently said that the first six months of 2020 were extremely tough. However, its latest trading update also noted that its performance had improved since the height of the coronavirus crisis.

This rebound gave management confidence to reintroduce the FTSE 100 company’s dividend, after suspending it at the beginning of the crisis.

After this move, WPP has become one of the first large companies to restore its dividend this year. The payout is small compared to historical distributions, but at 10p per share for the first half, it’s better than nothing.

Analysts reckon management will target a 22p distribution for the full year, that would give a dividend yield of 3.6% on the current share price. 

As well as its attractive income credentials, shares in WPP also look to offer a wide margin of safety. The stock is currently changing hands at a forward P/E of 8.7, that’s significantly below the market average of 14. 

As such, it looks as if shares in the FTSE 100 giant have the potential to produce high total returns for investors in the years ahead for a combination of income and capital growth. 

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 considered so you should consider taking independent financial advice.

Rupert Hargreaves has no position in any of the shares mentioned. 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.

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