2 no-brainer FTSE dividend shares I want to buy with £2k

Harvey Jones has identified 2 solid FTSE 100 dividend shares with growth potential. He’s aiming to rustle up £2k and will consider splitting it between the two.

| 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.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’ve bought a few high-risk, high-maintenance UK shares this year, and now I’d like to balance them with a brace of solid FTSE 100 dividend shares. The type that won’t cost me too much time or trouble. Nice and easy no-brainer buys.

I’m not looking for ultra-high yields, but a solid and sustainable rate of income that should rise over time. A bit of share price growth growth wouldn’t go amiss. I’m hoping to rustle up £2,000 to invest in January. If I do, I’ll consider splitting it between these two.

Should you invest £1,000 in Unilever right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Unilever made the list?

See the 6 stocks

Accounting software specialist Sage Group (LSE: SGE) fits the bill nicely. I’d always seen it as a growth stock, but data from AJ Bell shows it’s an unsung dividend hero too.

Sage Group has a very wise dividend policy

Over the last decade, the board has increased the dividend at an impressive rate 5.7% a year, according to AJ Bell. Let’s see what the chart says.


Chart by TradingView

Its dividend potential is easy to overlook, given a trailing yield of just 1.56%. That’s been eroded by its impressive share price performance. Sage shares are up 9.97% over 12 months, and 78.57% over five years.

Created with Highcharts 11.4.3Sage Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Some feared the group’s business model would be clobbered by the artificial intelligence revolution, but as we learn more about what AI can and (crucially) can’t do, it looks more likely to be boosted by it.

On 20 November, Sage reported an 11% rise in annualised recurring revenue to £2.34bn, while underlying operating profit surged 21% to £529m. Subscription renewal rates are an enviable 101%.

My big concern is that the Sage share price is expensive, with a price-to-earnings ratio of 34.47. That’s more than double the FTSE 100 average of 15.8%. Growth only has to disappoint slightly for the shares to sell off.

That’s a concern given the turbulent global economy, with small to medium-size businesses – Sage’s customers in other words – on the front line. So it’s not a 100% no-brainer but it’s jolly close.

DCC is a dividend super hero

Sales and marketing firm DCC (LSE: DCC) offers energy, healthcare and technology solutions. The trailing dividend yield is 3.6% but its history is a lot more impressive. It’s increased shareholder payouts at an average 10.8% a year for the past decade.

This is a true Dividend Aristocrat, having hiked shareholder payouts every year for three decades. Yet the shares have fallen 2.34% over the last year. It’s cheaper than Sage, with a modest P/E of just 11.98 times earnings.

Created with Highcharts 11.4.3Dcc Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

DCC has been divesting lately, as it looks to simplify its operations and focus on the energy sector.
It hopes to conclude the sale of DCC Healthcare next year, and will review its options for DCC Technology thereafter.

The group raised £150m after divested its majority stake in liquid gas business Hong Kong & Macau in July. All this should help unlock embedded value, and focus attention on its successful energy sector.

The risk is that having announced it, it struggles to follow through. Even if it does, there’s a danger that its narrow focus will leave it more exposed to volatile energy prices.

No stock is a total no-brainer. But Sage and DCC are as close as they get and I’ll invest £1k in each when I get that £2k.

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

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.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Aj Bell Plc and Sage Group 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.

More on Investing Articles

Investing Articles

Up 30% in weeks, does the BAE Systems share price still offer value?

The BAE Systems share price has been on a tear over the past couple of months. This writer sees limited…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Hunting for shares to buy as the market trembles? Remember this!

After a choppy week in global stock markets, our writer goes back to basics in his hunt for bargain shares…

Read more »

Investing Articles

3 simple principles to help build wealth in an ISA

As a new tax year opens up new ISA allowances for many investors, our writer shares a trio of things…

Read more »

Investing Articles

US trade tariffs: what they could mean for UK shares like Ashtead, Compass Group, and Experian

US trade tariffs continue to rock global markets, and the UK is no exception. Our writer considers how a new…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Dividend Shares

The Trump slump has smashed these FTSE 100 shares!

After a rough week for US and UK shares, investors have been shaken. But now these FTSE 100 stocks have…

Read more »

Investing Articles

£10,000 invested in Rolls-Royce shares 5 years ago is now worth…

Rolls-Royce shares have been on fire since April 2020. Part of this is the result of pandemic restrictions lifting, but…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

£10,000 invested in Tesla stock at its peak in 2024 is now worth…

Over the last few months, Tesla stock has lost nearly half its value. Here, Edward Sheldon explores a few takeaways…

Read more »

Investing Articles

Is the S&P 500 heading for an epic stock market crash?

Our writer shares his thoughts on a very crazy time for the S&P 500 and the wider stock market. How…

Read more »