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2 FTSE 100 dividend stocks I’d buy for my ISA

The ISA deadline is nearly upon us and if you’ve not made the most of your allowance for this tax year, now’s the time to do so. With that in mind, today I’m looking at two FTSE 100 dividend stocks that I’m eyeing up for my Stocks and Shares ISA right now. 

Catering giant

The first company I’m considering is the international catering business Compass Group (LSE: CPG). I don’t think it’s unreasonable to say Compass is a fantastic business. Over the past decade, the company’s earnings per share have grown at a steady 8% per annum as the business has chased up organic growth opportunities and completed numerous bolt-on acquisitions. Any cash that management hasn’t been able to re-invest has been returned to shareholders. 

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The combination of growth and cash returns has helped the shares return 20% per annum for the past decade. That’s turned every £1,000 invested in Compass back in 2009 into just under £7,000 — there are few, if any, other companies in the FTSE 100 that have been able to generate the same kind of return.

Room to grow 

And I think Compass still has a tremendous runway for growth in front of it. Even though it’s the largest catering business in the UK, management still sees tremendous scope for the group to grow overseas, reinvesting capital generated from its mature markets into new bolt-on acquisitions and organic growth opportunities.

With this being the case, even though shares in the business are changing hands at a P/E of 20.7, which is above what I would usually consider appropriate for a mature blue-chip, I reckon investors buying today will still be handsomely rewarded over the next decade as Compass continues to do what it does best. There’s also a dividend yield of 2.5% on offer.

Defensive industry

Another company that I’m considering for my ISA portfolio is pharmaceutical giant AstraZeneca (LSE: AZN). Astra is another highly valued security but, once again, I think it’s worth paying the current price of 23 times forward earnings to take part in this company’s future growth potential.

As the world continues to expand, the demand for drugs and healthcare services is only going to grow. As one of the largest pharmaceutical companies in the world, Astra is well placed to capitalise on this growth.

At the same time, the company has spent billions of dollars researching new treatments, specifically oncology treatments, which it has had some success with over the past 24 months.

The City believes as the company continues to develop and market these new treatments, Astra’s earnings per share could increase by as much as 22% in 2020, and continue to grow at a healthy clip in the years following. 

According to various forecasts, over the next five-to-10 years, the global pharmaceutical industry is expected to grow by around 6.3% per year. Assuming Astra’s earnings expand at the same rate between 2020 (the last year for which City forecasts are available) and 2025, I estimate the company is on track to earn $6.07 or 459p by 2025, implying the shares are currently trading at a 2025 P/E of 13.8. This seems to me to be an attractive price to pay for such a defensive, global business with fantastic growth prospects. In the meantime, investors can pocket a 3.4% dividend yield.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended AstraZeneca and Compass Group. 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.