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Forget buy-to-let! I reckon these 2 FTSE 100 shares could help propel you to a £1m ISA

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Fortunes have been won and lost in the property market, but mostly won by those holding buy-to-let property over the past couple of decades.

However, just because something worked well before, doesn’t necessarily mean it will keep on working. The government has changed the tax rules to make the buy-to-let sector less appealing to individual investors. Meanwhile, property prices look high and interest rates have been low for an eternity. Both those things could turn around and change their trend at any time.

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If property prices do fall – possibly because interest rates rise – it’s going to be much harder to turn a profit from buy-to-let in the coming years, I reckon. Instead, I’d invest in FTSE 100 shares like these two, which I think both have attractive dividend yields and upside potential.

By compounding my gains and periodically reinvesting dividends, I think these two could help propel me to a £1m portfolio over time.

Pharmaceuticals

As I’ve written before about pharmaceutical giant GlaxoSmithKline  (LSE: GSK), the share isn’t perfect as a dividend-led investment, but is there any such thing as a perfect share?

The dividend has been flat for years while the company has been re-investing back into its research and development pipeline. Previous best-selling drugs have been timing out of their patent protection, which means generic competition can flood in, grabbing market share and eroding GlaxoSmithKline’s profits.

I reckon the directors must feel like they’ve been wading through quicksand. As soon as they develop new potential big-sellers something else in the product portfolio seems to take a hit. Nevertheless, I like the pharmaceutical sector in general because it is known for its defensive, cash-generating characteristics.

One day, GlaxoSmithKline could start to make progress again and build up its earnings, cash flow and dividend payments. When and if that happens, the share price will likely rise to adjust to the new reality. In the meantime, I think the dividend yield running close to 5% is attractive.

Packaging and paper

Mondi (LSE: MNDI) ticks a lot of boxes for me with its multi-year record of steady annual growth in revenue, earnings, cash flow and the dividend.

I reckon the firm’s paper and packaging empire takes constant reinvestment to keep operations ahead of the curve. As such, the business seems to be offering a commoditised service rather than anything capable of generating high margins. But the demand for the company’s product seems to be steady, which gives the firm cash-generating qualities.

Meanwhile, the firm is growing steadily by adding bolt-on acquisitions and the growing dividend is attractive to me. The yield is running close to 4% and the outlook is positive, despite macroeconomic uncertainty.

A recent move to simplify the previous complicated dual-listed structure, along with an ongoing focus on cost control and efficiency places the business well for the future in my opinion. I’d be happy to make the share a core holding in my dividend-led portfolio.

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Kevin Godbold has no position in any share mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. 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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