2 FTSE 100 dividend shares I’d buy for my Stocks and Shares ISA in this market rally

I’m looking for cheap shares for my Stocks and Shares ISA before the stock market rebound makes all the top bargains disappear.

| 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.

2020 is turning out to be a great year for those looking for FTSE 100 shares for their Stocks and Shares ISA. Especially newcomers, who aren’t suffering any falls from last year. But either way, for long-term investors a stock market dip can provide some cheap buys.

Today I’m looking at two FTSE 100 shares that took a hammering when the pandemic arrived. They’ve both rebounded strongly in the past month, and I’m eyeing them up for my list of potential buys.

My first Stocks and Shares ISA candidate is British Land (LSE: BLND), which just released first-half results. The British Land share price was one of the biggest fallers in the early part of the crash, rapidly falling 50%. But now that news of Covid-19 vaccine progress seems to be arriving almost daily, it’s put in one of the most impressive rebounds. British Land shares are up 30% so far in November.

Liquidity fine, shares on a discount

But for it to be a Stocks and Shares ISA choice for me, I’d have to be convinced by the firm’s long-term potential.  And these first-half figures go some way towards that, even if they’re not immediately pretty. With its tenants, especially retail ones, under pandemic pressure, British Land has seen its underlying EPS fall by 34.8%. That’s due, not surprisingly, to a rise in provisions for rent receivables.

Its portfolio valuation has fallen too, by 7.3%. Retail properties took the brunt, down 14.9%. And net tangible assets declined 10.3% to 693p per share. But, wait a minute, the shares are trading at just 495p. So that’s a discount to net tangible assets of nearly 30%. Liquidity looks fine, with the firm selling £456m in retail assets since April — at 6.7% above book value.

British Land is paying an interim dividend of 8.4p per share, so analysts’ full-year expectations could prove too pessimistic. They’re predicting a return to a 4% yield next year anyway. Yes, British Land is firmly on my Stocks and Shares ISA list.

Another Stocks and Shares ISA pick

My second pick is in the property business too. It’s Barratt Developments (LSE: BDEV), whose shares are also rebounding strongly. The price was already picking up, and November has brought an extra 35% hike.

The Barratt Developments share price is now down just 10% in 2020, having bounced back above the FTSE 100. The lack of 2020 dividend has discouraged a lot of investors, and we’re expecting a big earnings fall for Barratt this year. But the housebuilding business can be cyclical. And I invest in a Stocks and Shares ISA for the long term, which means I’m happy to sit out short-term ups and downs.

I reckon Barratt has one of the most rock-solid long-term prospects there is. We’re still facing a chronic housing shortage, and the 2020 slowdown is surely just a pause in demand that won’t last.

Forecasts suggest a big earnings rebound for 2021–21. And there’s already a 3.4% dividend yield penciled in. I hold Persimmon shares, but Barratt could well be joining them in my Stocks and Shares ISA.

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.

Alan Oscroft owns shares of Persimmon. The Motley Fool UK has recommended British Land Co. 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

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »