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Forget the Cash ISA! 2 dirt-cheap FTSE 100 dividend stocks I’d buy today

As I write, the best easy access Cash ISA on the market has an interest rate of just 1.44%, according to a popular money-saving website.

Personally, I like my money to work harder for me than that. So while I keep some of my savings in cash, a lot of my spare money is invested in FTSE 100 dividend stocks. These offer much higher potential returns — the two stocks I’m going to look at today both yield more than 6%.

Ahead of expectations

One of my biggest buys in recent months has been advertising giant WPP (LSE: WPP), which is in the early stages of a three-year turnaround plan under chief executive Mark Read.

The WPP share price is up by nearly 7% at the time of writing, after Mr Read flagged up new business wins with eBay, Instagram and L’Oréal. Although the group’s underlying operating profit fell by 8% to £730m during the first half of the year, this was as expected.

Investor confidence was boosted this morning by signs that sales may be improving. Like-for-like sales fell by 1.4% during the second quarter, compared to a fall of 2.8% during the first three months of the year.

A bargain income buy?

One of Mr Read’s priorities has been to cut WPP’s net debt, which had reached more than £5bn. Today’s figures show welcome progress, with average net debt down to £4,384m during the first half of the year, compared to £4,966m in 2018.

Much of this reduction is being funded by disposals. The biggest of these is due early in 2020, when WPP expects to complete the sale of a 60% stake in data research agency Kantar for $3.1bn (£2.5bn). Around £1.5bn will be used to repay debt, with the remaining £1bn returned to shareholders — I estimate this could be worth about 80p per share.

Mr Read’s restructuring programme appears to be going very well. The second part of his challenge is to return the business to growth. It’s too soon to say how successful he will be, but I’m encouraged by progress so far.

With the stock trading on less than 10 times forecast earnings and offering a yield of more than 6%, I think the WPP share price offers great value for income investors.

A stock I’d buy and hold forever

The next stock on my list today is HSBC Holdings (LSE: HSBA). This Anglo-Asian bank recently surprised the market by announcing the departure of chief executive John Flint after just 18 months in charge.

The board is said to have lost confidence in Mr Flint’s ability to return the bank to growth and deal with difficult market conditions.

Personally, I don’t think shareholders need to worry too much about this. HSBC has been in business since 1865 and has an experienced board. A new boss will be found. In the meantime, I think the current lull in the bank’s share price could be a buying opportunity.

Last week’s half-year results looked pretty solid to me. Adjusted pre-tax profit rose by 7% to $12,516m, while the bank’s return on average tangible equity rose from 9.7% to 11.2%.

With the HSBC share price trading roughly in line with the bank’s book value and offering a 6.6% dividend yield, I think today could be a great time for income investors to snap up some stock.

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Roland Head owns shares of WPP. The Motley Fool UK has the following options: short October 2019 $37 calls on eBay and long January 2021 $18 calls on eBay. The Motley Fool UK has recommended eBay and HSBC Holdings. 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.