2 FTSE 100 dividend-paying stocks to buy in an ISA

The deadline for new money going into Stocks and Shares ISAs is just around the corner. Here are two FTSE 100 dividend stocks I’m thinking of adding to my ISA.

| 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.

I choose to buy UK shares in a tax-efficient Stocks and Shares ISA. And today I’m looking for the best FTSE 100 dividend-paying stocks to own before next week’s annual ISA deadline.

I like using a Stocks and Shares ISA because it allows me to invest £20,000 each tax year without having to pay a chunk of my profits to the taxman.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

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.

With that 5 April deadline coming around the corner I’m therefore looking for last-minute stocks to add to my portfolio. I don’t have to buy shares right now with any funds I choose to park in my ISA. But I don’t see any reason to delay.

These FTSE 100 stocks have attracted my attention with their decent dividend yields. Should I buy them today?

Under pressure

J Sainsbury’s (LSE: SBRY) 4.6% dividend yield for the upcoming financial year (to March 2023) has really grabbed my attention. I believe the grocer could be considered an ideal stock to own as the cost of living crisis worsens.

After all, profits across the food retailing industry remain broadly stable during upturns and downturns.

That said, I think established grocers like Sainsbury’s could lose out to the discounters like Aldi and Lidl in the current climate.

I’ve recently described how Tesco could be a casualty of these low-cost chains as consumer value becomes increasingly important. Supermarkets could be battered by the discounters’ ambitious expansion plans too, hitting earnings and dividends further down the line.

Sainsbury’s could face a hard battle to stop revenues sinking, then, and margins slumping as it tries to compete on price.

However, intense competition isn’t the only threat to profitability. Sainsbury’s itself is facing calls from investors to raise wages due to the cost of living crisis. This adds to the upward pressure that supply chain issues are placing upon product costs.

A FTSE 100 dividend stock I’d buy

On reflection, Sainsbury’s carries far too much risk for my liking. Instead I’d much rather invest my hard-earned cash in BAE Systems (LSE: BA). Global spending on defence has been rising at its fastest rate for decades. The tragic events in Ukraine look set to supercharge demand for the sector still further.

Indeed, US President Joe Biden is about to request a massive $813bn for defence, according to sources. This is up tens of billions of dollars from what was being projected just a year ago.

BAE Systems provides a broad range of defence products to the US and UK militaries. It can therefore expect orders to soar as the West responds to escalating tension in Europe and in Asia.

A high-profile failure of its systems is a constant threat that could hammer future demand for its technology. But BAE Systems’ strong track record on this front gives me, as an investor, huge confidence. Today this FTSE 100 firm carries a healthy 3.5% dividend yield, in line with the index’s forward average.

Inflation Is Coming: 3 Shares To Try And Hedge Against Rising Prices

Make no mistake… inflation is coming.

Some people are running scared, but there’s one thing we believe we should avoid doing at all costs when inflation hits… and that’s doing nothing.

Money that just sits in the bank can often lose value each and every year. But to savvy savers and investors, where to consider putting their money is the million-dollar question.

That’s why we’ve put together a brand-new special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation…

…because no matter what the economy is doing, a savvy investor will want their money working for them, inflation or not!

Best of all, we’re giving this report away completely FREE today!

Simply click here, enter your email address, and we’ll send it to you right away.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Sainsbury (J) and Tesco. 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.

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.

More on Investing Articles

Young brown woman delighted with what she sees on her screen
Investing Articles

3 easy actions that could boost my stock market returns

The UK stock market is going through a sticky patch so this Fool is looking for ways to improve his…

Read more »

Hispanic man using laptop in home office and drinking coffee
Investing Articles

Boohoo shares: time for me to admit defeat?

This Fool is nursing heavy losses from his Boohoo Group (LON: BOO) shares. Should he sell up and move on?

Read more »

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

6% dividend yields! 2 cheap UK shares to buy in July

Harshil Patel considers two cheap UK shares paying fairly high dividends. He'd consider them for his Stocks and Shares ISA.

Read more »

Social media and digital online concept, woman using smartphone
Investing Articles

Will Lloyds shares recover in 2022?

Lloyds shares have struggled this year and the looming recession won't help. But I'd still buy them today.

Read more »

Two hands holding champagne glasses toasting each other with Paris in the background
Investing Articles

Can the stock market make me rich even now?

Here are three ways I'm coping with the stock market's recent bout of weakness and aiming to build wealth in…

Read more »

Cogs turning against each other
Investing Articles

3 top investment trusts to buy right now

Investment trusts offer a wide range of options for investors. And in troubled times, they provide some safety through diversification…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

Why hasn’t the FTSE 100 crashed in 2022?

The catastrophic events of 2022 have left investors around the globe fearing the worst for stock markets. And some have…

Read more »

Trader on video call from his home office
Investing Articles

2 inflation-resistant FTSE 100 stocks to buy today

Soaring inflation could dent my returns if I don't take care. Here are two top inflation-resistant FTSE 100 stocks I'd…

Read more »