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BAE Systems isn’t the only FTSE 100 dividend stock I’d buy for my ISA right now

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While the FTSE 100 has enjoyed a decent bounce this year and is currently above 7,000 points, there is still plenty on offer within the index right now, in my view. There are also some amazing yields on offer at present, which is great news for those who like their dividends. With that in mind, here’s a look at three FTSE 100 dividend stocks that I think could be good ISA purchases.

BAE Systems

Shares in defence giant BAE Systems (LSE: BA) have had a poor run over the last six months, falling from over 600p, to around 470p. Yesterday was a particularly bad day for the stock, with the shares falling 7% after the group warned that the political tension between the UK/Germany and Saudi Arabia could potentially have a material impact on revenue if the situation is not resolved.

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However, personally, I’m inclined to view this uncertainty as short-term noise. With the group also stating yesterday that its defence order backlog is now at a “record high,” with visibility on many of its key programmes through the next decade, I see the long-term growth story as intact, and as such, I believe the 20% share price fall over the last six months has created an attractive entry point.

At its current share price, BAE Systems trades on a forward P/E of just 10.5 and offers a prospective yield of 4.9%. I see those metrics as attractive.

Schroders (non-voting shares)

Another FTSE 100 stock that is a little out of favour right now is investment manager Schroders (LSE: SDRC). Its share price pulled back as global equity markets declined late last year, which is no surprise as investment managers’ income is related to their assets under management.

However, with the non-voting shares currently trading at around 2,100p, I see significant value on the table, as the stock’s forward P/E is now under 10. Furthermore, the share price decline has pushed the company’s prospective yield up to 5.5%, which looks like a steal to me.

With Schroders recently announcing a joint venture with Lloyds Bank that will see the two companies develop a ‘market-leading wealth management proposition’, I think the stock is worth a closer look right now.


Finally, I also think Aviva (LSE: AV) shares offer a lot of value at present. Aviva’s share price fell significantly in the last quarter of 2018 after CEO Mark Wilson resigned in October. The company has been slow in finding a replacement and this hasn’t helped sentiment towards the stock. Yet I think the share price fall over the fourth quarter was a little excessive, and as such, I think the stock offers the potential for both dividends and capital growth from current levels.

Aviva has paid out some big dividends in recent years and also notched up four consecutive dividend increases, which demonstrate that it has turned things around in recent years. And analysts expect the dividend growth to continue in the near term with healthy increases forecast for FY2018 and FY2019. With the stock currently trading on a forward P/E of just 7 and offering a prospective dividend yield of more than 7.5%, I think now is the time to be buying.

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Edward Sheldon owns shares in BAE Systems, Aviva, Lloyds Banking Group and Schroders (non-voting). The Motley Fool UK has recommended Lloyds Banking Group and Schroders (Non-Voting). 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.