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Two FTSE 100 shares I’m buying for my ISA

There are two FTSE 100 stocks I think are highly attractive right now. So much so, they’re the only stocks I’m currently buying for my ISA.

In fact, not only do I think these are the best FTSE 100 stocks to buy right now, but they’re also the most substantial holdings in my equity portfolio. I’m going to explain why.

A global leader

Prudential (LSE: PRU) is, in my opinion, one of the best-managed companies in the UK’s blue-chip index. The business has been the go-to life insurance and long term savings provider in the UK for decades, and its expansion into Asia was perfectly timed.

The group’s Asian business has been a key growth driver over the past decade, and analysts expect this trend to continue for the foreseeable future as the pensions and savings market across Asia is still relatively underdeveloped compared to Western countries.

Prudential wants to capitalise on this potential by splitting itself in two. The firm is planning to de-merge its UK business, M&G Prudential, from the international company, which should unlock value for shareholders. Indeed, I calculate that the sum-of-the-parts (SOTP) of these two businesses is over 2,000p per share, that’s around 15% above current levels. Some analysts believe the SOTP is even higher, with estimates suggesting it could be as high as 2,500p.

The group is expected to complete its breakup at some point in the next 12-24 months, and this should unlock the value I’ve mentioned above. In the meantime, the shares support a dividend yield of 3.1%.

Dividend champion

As well as Prudential, I’m also buying insurer Admiral (LSE: ADM) for my ISA portfolio. There are a handful of insurance businesses that trade on the London markets, but Admiral stands out to me because it has the highest profits margins of them all.

The enterprise reported an operating profit margin of 37.7% last year, compared to the industry average of 9.2%, because the group has the lowest costs in the sector. Insurance companies can’t do much about the level of claims they have to pay out to customers, but they can control their cost base. And Admiral has invested a considerable deal of time and effort in trying to make sure its costs remain as low as possible.

By keeping costs low, the company can offer a better service to customers while still achieving a good result for shareholders.

The company is somewhat of a dividend champion, paying out a combination of regular and special dividends every year, depending on the environment. For 2019, analysts are expecting the firm to distribute around 137p to shareholders giving a prospective yield of 6.2%.

Unfortunately, this level of income doesn’t come cheap. The stock is currently trading at a forward P/E of 17. However, I think this is a price worth paying for Admiral’s market-leading profit margins.

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Rupert Hargreaves owns shares in Prudential and Admiral. The Motley Fool UK has recommended Prudential. 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.