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3 FTSE 100 5%+ dividend stocks I’ve bought for my 2019 ISA

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My long-term investing strategy is to build my ISA stock portfolio into a cash machine that will provide a reliable and tax-free income for me in the future.

Today I want to look at three of my latest buys, each of which offers a forecast yield for the next year of 5% or more.

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Safer than houses

I like the long-term income potential of property, but I don’t want to depend solely on the UK’s housing market. Instead, I’ve chosen a FTSE 100 company with a 50/50 split between prime London office space and UK retail and leisure property.

British Land (LSE: BLND) is one of the UK’s biggest and oldest landlords. It has a £13.7bn property portfolio that generates an annual rental income of about £580m.

Although I expect modest capital gains over the long term, I see this mainly as an income stock. That’s okay with me. At the current yield of about 5.2%, my holding should double in value over the next 14 years without any capital gains, simply by reinvesting the dividends.

British Land’s management spotted the current retail downturn well ahead of time. Since April 2014, it has sold £2.8bn of retail property. This has helped to fund share buybacks and reduce net debt. Occupancy has remained high and stood at 97.8% at the end of September.

Retail conditions may continue to worsen. But the group’s London office property should be resilient and the stock trades at a 36% discount to its book value. In my view, the shares are still a good long-term income buy.

Packaged profits

Another business I rate as a long-term opportunity is packaging. My personal pick in this sector is DS Smith (LSE: SMDS). This group has expanded through acquisition in recent years and is now focused on becoming a market leader in sustainable paper and cardboard packaging.

The group recently sold its plastics division for $585m, which will help to reduce debt and reduce exposure to this environmentally-sensitive market.

Despite this, the group has fallen out of favour with investors thanks to concerns about an economic slowdown. DS Smith’s share price has fallen by about 30% over the last six months.

The shares now trade on just 9 times 2019/20 forecast earnings and offer a yield of 5.1% for the coming year. In my view that’s cheap enough to offer a margin of safety and make the shares a buy.

I’ve bought this 7% yield

FTSE 100 advertising group WPP (LSE: WPP) has been through a tough period following the departure of long-time boss Sir Martin Sorrell. Underlying earnings fell by 10% last year as the group lost a number of important clients.

However, I believe Sorrell’s replacement Mark Read is taking the right steps to turn things around. Mr Read has already made 36 disposals totalling £849m and combined some of the group’s core business to offer a more integrated and tech-focused services to clients.

The dividend looks a little stretched at 60p per share, but net debt is down and cash generation remains healthy. Management has said it plans to main this payout and I think this will probably be possible.

If I’m right, the shares could prove to be very cheap at current levels, trading on a 2019 forecast price/earnings ratio of 8.5 with a 7% dividend yield. I’ve added some to my portfolio.

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Roland Head owns shares of British Land Co, DS Smith, and WPP. The Motley Fool UK has recommended British Land Co and DS Smith. 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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