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Forget Lloyds shares! I’d rather buy this FTSE 100 dividend stock for my ISA

macro shot of computer monitor with FTSE 100 stock market data in trading application
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I’m not surprised to see the Lloyds share price slipping again. Ive long argued that the threat of stubbornly-low interest rates, rising competition and the possibility of a lumpy economic recovery all make the FTSE 100 bank a risk too far. So I’m prepared to ignore it despite its attractive 5%+ dividend yields.

I’d much rather buy ITV (LSE: ITV) for my Stocks and Shares ISA. Sure, the broadcasting behemoth might be on the cusp of being relegated from the prestigious FTSE 100. But to my mind this dirt-cheap UK share has lost none of its allure.

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Advertising spending in the UK continues to rise at a staggering rate. It’s why the Advertising Association and WARC in late July upgraded its UK ad spend predictions by a fatty margin. Growth of 18.2% is now estimated for 2021, up from the 15.2% predicted just two months before. This would be the highest year-on-year rise on record. And the good news doesn’t end there either, the bodies predicting a 7.7% rise in ad budgets in 2022.

4.8% dividend yields

These rapidly-improving conditions have already been shown in ITV’s trading updates. Total advertising revenues at the business surged 29% in the first six months of 2021, with sales booming 87% and 115% in May and June respectively. This helped drive adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) 98% higher year-on-year to £327m.

This improved trading explains why City analysts think ITV’s earnings will soar 19% in 2021. They also think that the ad market improvement will drive annual profits 3% higher next year. This means that the FTSE 100 company trades on a forward price-to-earnings (P/E) ratio of just 9 times. It’s a reading that I think reflects the possibility of forecasts being blown off course if rising Covid-19 cases choke off the economic recovery.

I don’t believe that ITV is just great value from a growth perspective, either. Analysts reckon the broadcaster will reintroduce shareholder payouts later this year, with dividends of 3.3p and 5.5p per share anticipated for 2021 and next year respectively. This results in a decent-if-unspectacular yield of 3% for this year, and a handsome 4.8% for 2022.

A great long-term FTSE 100 buy

I don’t just think ITV is a great buy for the near term though. Admittedly, I have to think of the threat posed by other broadcasters and streaming services, which is significant as far as mainstream broadcasters are concerned. However, I think this FTSE 100 share’s huge investment in its ITV Hub and BritBox video on demand (VOD) platforms could pay off handsomely in the years ahead as viewing habits steadily change. For example, ITV Hub grew its UK subscriber base by an impressive two million users in 2020 to 33m.  ITV is clearly facing the threats to its business head-on.

I’d also buy ITV because of the growing role its ITV Studios division is playing on the global stage. Hits like Victoria, Snowpiercer and Love Island are screened to millions of viewers by channels all over the world. And ITV is committed to aggressive expansion here to build its geographical footprint and portfolio of top shows. I think this FTSE 100 stock could help me make big ISA returns in the years ahead.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV and Lloyds Banking Group. 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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