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Have a Stocks & Shares ISA? Here are two FTSE 100 dividend stocks I’d buy today

Owning a selection of dividend stocks within a Stocks & Shares ISA is a great investment strategy, in my view. Your dividends will be tax-free, meaning you could potentially build up a nice little second income stream that’s entirely sheltered from the taxman.

With that in mind, here’s a look at two FTSE 100 dividend stocks I’d be happy to buy for my ISA today.

Legal & General Group

Legal & General (LSE: LGEN) remains one of my favourite FTSE 100 dividend stocks. Not only is the yield here extremely attractive, at around 6.5% (forecast yield for FY2019), but the stock’s dividend coverage ratio is also healthy at 1.9 times, meaning the payout looks sustainable. Furthermore, the group has now registered nine consecutive dividend increases, which shows that shareholders are a priority.

One of the key strengths of Legal & General, to my mind, is its diversified business model. Not only is the company a major player in insurance and investment management, but it also specialises in retirement solutions for individuals and pensions de-risking for corporations.

Additionally, it has ventured into infrastructure investment and retirement living in recent years and announced last week that it plans to build 3,000 retirement homes in city centres across the UK in the next five years.

Overall, the group’s long-term strategy is driven by six global growth drivers, including the world’s ageing population and technological innovation.

Despite the progress Legal & General has made over the last decade, its shares still trade very cheaply as many investors appear to have lumped the stock in the ‘UK domestic stock/Brexit’ basket. Right now, the stock’s forward P/E ratio is just 8.3. I think that’s a bargain. Note that broker Jefferies just raised its price target for the stock to 300p.


I also continue to like FTSE 100 packaging stocks at the moment due to the fact that packaging plays an important role in online shopping – if you buy something online, it generally comes in a cardboard box. With e-commerce likely to continue increasing in popularity in the years ahead, demand for cardboard packaging should remain robust, and this should drive growth for packaging specialists.

One stock that I like in this sector is Mondi (LSE: MNDI) – an under-the-radar FTSE 100 stock that was spun off from mining giant Anglo American around 12 years ago. Mondi appears to have plenty of momentum at the moment. Last week, it told investors it delivered a “strong performance” in the first quarter, with underlying EBITDA for the three months up 16% on the same period last year. The company also advised that despite macroeconomic uncertainty, it’s confident it can continue to deliver a “strong and industry-leading performance.”

Mondi’s dividend prospects look appealing. The yield is robust at 4.2% (forecast for FY2019), coverage is strong at around 2.3 times, and the company has now registered nine consecutive dividend increases. With the stock trading on a forward P/E of just 10.2, I see a lot of value on the table right now.

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Edward Sheldon owns shares in Legal & General Group and Mondi. The Motley Fool UK has no position in any of the shares mentioned. 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.