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Forget buy-to-let! I’d buy these 2 FTSE 100 bargain dividend stocks in an ISA today

Buy-to-let’s been a rip-roaring success over the last 20 years, but I feel its best days are over. House price growth is slowing, the taxation burden continues to increase, and landlords are being demonised politically.

By contrast, the FTSE 100 looks increasingly attractive. It’s now on course to yield 4.8% a year, and is full of stocks offering high yields at bargain valuations. If you buy and hold them inside a Stocks and Shares ISA, you don’t have to worry about paying income tax or capital gains tax on your returns.

Here are two blue-chip stocks you’ll almost certainly know, that I reckon are real bargains at the moment.

Legal & General Group

After a spell in the doldrums, Legal & General (LSE: LGEN) is finally delivering some share price growth, up 12% in the last year. Revenues and profits are both rising sharply, with the £16bn insurance giant recently posting a first-half operating profit of just over £1bn, up 11% year-on-year.

Falling revenues from individual annuity sales have been offset by growth in ‘bulk annuity’ company schemes, with L&G now managing the largest of the lot, Rolls-Royce.

This isn’t just a UK operation as it has exposure to fast-growing Asia as well. And its asset management arm Legal & General Investment Management has been enjoying significant inflows from Asian clients.

Legal & General’s product range includes pensions, investments, insurance and retirement planning, giving it a diversified spread of financial services products, although that does leave it exposed to stock market volatility.

Investors have been concerned over whether profits can grow fast enough, and that may have held back the L&G’s share price in the past. Incredibly, it trades at just 8.6 times earnings, while offering a forecast yield of 6.5%, nicely covered 1.8 times by earnings. This gives you a nice safety margin and generous income stream, even if we’re heading for some share price turbulence this autumn.


Broadcaster ITV (LSE: ITV) has had a poor reception from shareholders lately, its share price down by a third over the last five years. The £5.52bn group has been hit by falling revenues from its traditional mainstay of advertising, amid tough competition from streaming services and other distractions such as the internet.

Management has been scrambling to make up for this from other sources, with some success, helped by its ITV Studios content generating operation. Its BBC co-venture subscription video on-demand service BritBox already operates in the US and Canada, and is set to launch in the UK shortly. A lot hangs on its success.

The ITV share price has made compulsive viewing lately, rising 30%, although much of this was driven by unsubstantiated takeover talk. I never buy shares on stock market rumours and prefer to look at fundamentals such as the stock’s valuation. Here, ITV looks attractive trading at 10.8 times earnings.

The stock is also forecast to yield 5.8%, with cover of 1.6. Earnings forecasts look patchy as the group’s turnaround is far from complete, but the combination of a bargain valuation and well-covered dividend is always difficult to resist.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. 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.