The Motley Fool

2 UK dividend stocks I’d buy now for my ISA

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.

Hand holding pound notes
Image source: Getty Images.

We’re now past the ISA deadline for the 2020/21 subscription period. So my £20,000 allocation resets, and I can put money into my Stocks and Shares ISA and invest it as I see fit with less urgency.

But given the fact that there’s still a lot of uncertainty within the economy, I want to allocate some funds now into UK dividend stocks. That way, I can try to accumulate income. Even though I’ll leave it within my ISA so that I get the dividends paid gross of tax, it’s good to know I’m building a pot that I can call on if I need.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story. In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

UK dividend stocks I’m considering

Even though some companies have cut dividend payouts due to the negative impact of the pandemic on cash flow, there are still multiple options. One that I like at the moment is Unilever (LSE:ULVR). The current dividend yield is 3.47%.

Unilever is a well known company that owns over 400 consumer brands. It focuses on three main divisions (food & drink, home care and personal care & beauty). Given that many of its brands are ‘needs’ versus ‘wants’, I think it’s a conservative UK dividend stock that doesn’t pose high risk.

This can be seen from the 2020 results. Even during a global pandemic, revenue only shrank by 4.2%. GAAP net profit actually grew slightly, by 0.8% versus 2019. I like this stability in earnings, and it’s something I think that will support a dividend continuing to be paid in the future.

A potential risk here is that because of the size of the business, high future growth is likely limited. For a company that turns over €12.1bn, I struggle to see a catalyst for double-digit annual growth. Versus a smaller and newer company, the opportunity cost to invest is quite high.

Shopping around for a deal

A second UK dividend stock that interests me at the moment is Admiral Group (LSE:ADM). It’s a financial services business, mostly serving the UK via home and vehicle insurance. It also operates websites including Confused.com for price comparisons. 

This UK dividend stock currently offers me a yield of 3.8%, which is above the FTSE 100 average. Added to this is a positive outlook for it, in my opinion. 

Profit grew by 21% in 2020, largely driven by growing the customer base by 10%. It’s also focusing heavily on further digitalisation and technology upgrades, something that I think will pay dividends (pardon the pun) going forward.

Although not something I usually put much weight on, Admiral also has a great company culture. It won three awards for being on shortlists of the best places to work in 2020. During the pandemic and remote working, having employees who feel valued (and therefore will go the extra mile to help), is important.

The risk for me is the personal loans side of the business. Given the economic uncertainty in the UK right now, I’d be concerned about possible defaults here damaging the overall performance.

Both the UK dividend stocks mentioned above offer me above average yields to add into my ISA. I’d consider buying both now.

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you'll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

jonathansmith1 has no position in any of the shares mentioned. The Motley Fool UK has recommended Admiral Group and Unilever. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.