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Have £2k to invest? 2 FTSE 100 dividend stocks I’d buy for my ISA today

There are just 13 trading days left in the current ISA year. If you haven’t used all of your £20,000 annual ISA allowance yet, time is running short.

I’ve been looking for FTSE 100 dividend stocks I think should be reliable long-term investments — whatever happens with Brexit.

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A fixer-upper

DIY chain Kingfisher (LSE: KGF) — which owns B&Q and Screwfix — is in the middle of a five-year renovation project that’s intended to boost profit margins and deliver sales growth. But as any keen DIYer will know, such projects are often trickier than expected.

Today’s full-year results revealed the group’s pre-tax profit fell 53% to £322m last year, despite sales remaining broadly flat at £11,685m. However, much of this was due to £251m of exceptional costs, mostly relating to planned store closures and other elements of the group’s transformation plan.

Stripping out these one-off factors, Kingfisher’s adjusted pre-tax profit was 19% lower at £573m. This isn’t great news, but lower tax costs helped limit the hit to after-tax earnings and maintain a decent level of cover for the dividend, which was left unchanged at 10.8p per share.

The right time to buy?

The main problem with investing in a turnaround situation is that the hoped-for improvements don’t always happen. Today’s numbers from Kingfisher are a good example. The firm’s five-year plan to combine the product ranges and infrastructure used to support its stores in the UK and France was originally meant to deliver a £500m improvement in annual profit.

Today, the business announced it won’t be pursuing this target anymore, and will instead just target sales and profit growth across the group as a whole.

Alongside this, shareholders also received news that chief executive Veronique Laury will be leaving the business when a replacement can be found. The firm’s chief financial officer has also left during the last year, without a permanent replacement.

Things are clearly difficult at Kingfisher, especially in France, where the Castorama chain is performing badly. But this could be a low point.

Last year’s results only showed a small drop in profit margins and the shares haven’t moved much today, suggesting that the news was pretty much as expected.

Kingfisher shares now trade on a 2020 forecast price/earnings ratio of about 9.8, with a 4.5% yield. The balance sheet remains strong, with net cash of £48m. In my view, only a small improvement would be needed to make the shares look cheap. I see this as a turnaround buy at under 250p.

I like this FTSE 100 family firm

Family-controlled firms are unusual in the FTSE 100, but one rare example is Associated British Foods (LSE: ABF), where the founding Weston family remain controlling shareholders. This group owns discount fashion retailer Primark plus a range of food and grocery businesses. These include British Sugar and popular brands such as Twinings, Ovaltine, Jordans and Ryvita.

This conglomerate approach has worked well, delivering fairly stable profits and attractive returns on investment over many years. The group’s dividend payout has risen every year since 1996, at an average rate of 7.7% per year.

This inflation-beating performance is outstanding, in my view. That’s why I’d be happy to pick up some of these shares today, despite the lowly 2% dividend yield. As a long-term holding, I’d expect strong returns from ABF.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Associated British Foods. 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.