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2 FTSE 100 dividend stocks I’d buy for my ISA post-Thomas Cook

The FTSE 100 might be sparking higher again – it’s now up 5% over the course of the past month – but there’s still many a bargain to be had right now.

Take TUI Travel (LSE: TUI) as an example. The demise of rival Thomas Cook this week has, as one would expect, given the share price a splash of jet fuel. But the travel giant still looks pretty undervalued in my book. At current prices it trades at 8.1 times predicted earnings for the year to September 2020, which is below the bargain-basement watermark of 10 times.

Revolution in the air

That said, I can understand why some share pickers might still be reluctant to buy, given the threat posed to providers of traditional package holidays like TUI. However, I’m encouraged by the steps and huge investment it is taking to drag itself into the 21st century by becoming “an integrated digital tourism platform business.”

The travel agent’s freshly-launched online platform in new markets – one offers more bespoke holidays for travellers – has been so successful that TUI has proclaimed it’s on course to reach its goal of 1m additional customers by 2022 ahead of schedule.

This bodes well for the scaling-up of the platform. With the business also doubling-down on sales of non-core assets to create a more-focussed, less-flabby entity for the web-savvy era, it’s certainly making all the right noises.

It’s important to note that while package holidays aren’t as popular as they once were, there are still a lot of people who want the convenience of putting their feet up, and who are willing to pay an operator to do all the legwork for them.

Let’s not forget that the failure of Thomas Cook has led to the biggest repatriation of UK citizens in history, with an estimated 150,000 customers stuck abroad at the time of the company’s collapse.

I believe TUI has got the goods to deliver splendid profits growth in the years ahead, and that at current prices it’s worth a very close look, particularly as right now it offers a gigantic 6.3% dividend yield for fiscal 2019.

More 6%+ dividend yields

It’s also no surprise that International Consolidated Airlines Group’s (LSE: IAG) received a share price boost following news of Thomas Cook going to the wall.

As one would expect, a profit warning on Thursday, due to the recent pilots’s strike, prompted a spate of selling. But investor interest picked up again in end-of-week trading, and I’m not surprised, as the British Airways owner’s long-term outlook remains compelling.

As I’ve said before, I’m convinced that IAG’s strong position in the growing transatlantic market, allied with its rising might in the European budget segment, will provide the perfect recipe for great profits growth. The Footsie firm recorded a 7.2% upswing in passenger revenues in the first half of 2019 and its disciplined approach to capacity expansion should keep the top line roaring higher.

At current prices, IAG carries a monster 6.2% dividend yield for 2019 and a rock-bottom corresponding price-to-earnings of 4.6 times. I reckon that, like TUI, it’s a top buy for all income chasers looking to grab a bargain.

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Royston Wild has no position in any of the shares mentioned. 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.