3 fantastic dividend stocks to consider for fresh ISA money

Edward Sheldon believes these dividend stocks have the potential to provide a winning combination of income and share price gains in the years ahead.

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Dividend stocks are popular ISA investments and it’s easy to see why. These stocks can potentially generate both passive income and share price gains.

Looking for dividend ideas for fresh ISA money? Here are three shares to consider.

Loads of potential

First up is Unilever (LSE: ULVR). It’s a leading consumer goods company that owns loads of well-known brands (Dove, Knorr, Domestos, etc).

I believe Unilever shares have the potential to provide attractive total returns (share price gains plus dividends) in the years ahead.

For starters, there’s a dividend yield of near 4% on offer right now. And analysts expect the payout to rise going forward.

Secondly, there’s scope for share price gains if management can pull off the ‘growth action’ transformation plan it recently announced. A successful execution of this plan could see the stock get a lot more attention from investors.

The risk here is that weak economic conditions force consumers to trade down to cheaper brands. This could lead to underperformance from the stock.

Trading on a forward-looking P/E ratio of 16 using next year’s earnings forecast however, I like the risk/reward set-up.

Performing well

Next, we have Coca Cola HBC (LSE: CCH). An under-the-radar FTSE 100 company, it’s a major bottling partner to soft drink powerhouse Coca-Cola.

I think this stock offers a lot of value at present with the company performing well.

Last year, for example, net sales revenue was up 16.9% year on year to €10.2bn – the third consecutive year of double-digit growth – while earnings per share rose 21.8% to €2.08.

Yet currently, the valuation’s quite low. With analysts forecasting earnings per share of €2.16 this year and €2.39 next, the forward-looking P/E ratio is just 13.5, falling to 12.2 using next year’s forecast.

Add in a dividend yield of 3.3% and the overall proposition’s very attractive.

Of course, like a lot of businesses, Coca Cola HBC is vulnerable to economic and geopolitical turbulence. However, personally, I can’t see demand for Coke falling off a cliff any time soon.

Super cheap

Finally, we have FTSE 250 company Keller Group (LSE: KLR), a leading construction business that specialises in foundation technology.

I last covered Keller on 5 February. At the time, I said the set-up looked favourable, due to the huge amount of infrastructure spending in the US right now (where Keller has plenty of exposure).

Fast forward to today, and the shares are about 22% higher than they were back then, due to strong 2023 results in March.

I reckon this stock is just getting started however. Currently, the forward-looking P/E ratio is just 7.6, which leaves plenty of room for a valuation re-rating if performance this year is strong (which I suspect it will be, given the backdrop in the US).

As for the dividend, it’s on the rise. Last year, management hiked the payout 20% to 45.2p. This year, analysts expect 47.8p – a yield of 4.6% at today’s share price.

Now, construction’s a cyclical industry. So there’s always the chance of a downturn at some stage. But with billions of dollars set to be spent on infrastructure in the US in the next few years, I remain bullish.

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.

Edward Sheldon has positions in Coca-Cola and Unilever Plc. The Motley Fool UK has recommended Unilever Plc. 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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