FTSE 100 shares I’d buy before the 5 April ISA deadline

The Stocks and Shares ISA deadline is fast approaching. Harshil Patel considers the best FTSE 100 shares he’d buy to maximise his returns.

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The Stocks and Shares ISA deadline is fast approaching. I’ve got until 5 April to maximise as much of this year’s tax allowance as I possibly can. I’ve got some savings that I’d like to add to my ISA and I’m currently looking for the best FTSE 100 shares to buy.

I don’t need to buy shares as soon as I’ve added funds to my ISA, but given recent market turmoil, I think there are some bargains available.

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Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

FTSE 100 sale

As a long-term investor for many years, I know that share prices rise and fall. Quite often, stock market declines can be an opportunity for me to buy quality UK shares at lower prices. A bit like a clearance sale.

As the FTSE 100 index includes the UK’s largest 100 listed companies by market capitalisation, that’s where I’d start. It’s full of established companies, many of which are household names.

Right now, I reckon the UK is one of the cheapest developed markets in the world. Recent share price falls have also caused the average FTSE 100 dividend yield to rise to 3.9%. That’s great news for income investors like myself.

Although I own a broad selection of growth stocks, and value shares, I also own many dividend shares. Yes, these shares can grow at a relatively slower pace, but I like the regular income that they provide.

10% dividend yield!

One FTSE 100 share that I reckon is both on sale and offers an excellent dividend yield is Imperial Brands. It currently trades on a price-to-earnings ratio of just 6 times and offers a market-leading dividend yield of 10%.

Analysts expect sales and earnings to rise modestly over the next few years. That said, it will need to carefully manage regulatory change. It’s a feature that is common in the industry, but Imperial has much experience in managing the impacts.

Overall, it’s a highly cash-generative business with a large portfolio of established brands. I reckon it offers excellent value and would consider adding it to my ISA.

Defensive quality share

My next FTSE 100 share that I’d buy is drinks maker Diageo (LSE:DGE). Its shares have dropped by 14% this year, and it’s now trading at the same price as last summer. But little has changed regarding the fundamentals of this company to warrant such a discount, in my opinion. It’s a high-quality business that I’d be happy owning for many years.

In the current climate, it’s nice to own some defensive shares. And I reckon it doesn’t get much more defensive than Diageo. It owns many major brands, including Guinness and Smirnoff, and has a history spanning centuries. I think plenty of these brands will still be thriving in the decades to come.

That said, commodity costs are rising fast and Diageo will need to carefully manage any potential cost pressures.

Looking at the numbers, I like that this Footsie drinks giant operates with a 30% profit margin. It also offers a return on capital employed of 17%, a key measure of business quality. Overall, I reckon the share price fall has created an opportunity to add these quality shares to my ISA.

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