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3 FTSE 100 dividend stocks I’d buy for my ISA today

With interest rates on savings accounts still depressing low, FTSE 100 dividend stocks remain a good option for those seeking higher returns, in my view. With that in mind, here’s a look at three I’d be happy to buy for my own portfolio today.

BAE Systems

One sector I’ve been bullish on for a while now is defence. The recent conflict between the US and Iran is a good example of why. In this sector, my preferred play is BAE Systems (LSE: BA) – a multinational defence and security business that helps to protect national security and keep critical information and infrastructure secure.

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It has quite a bit of momentum at present. For example, just last month, the group signed a $2.68bn contract with the US Navy to supply laser-guided rockets, while earlier this week, it signed a smaller $175m contract for guided missile cruiser modernisation.

BAE is a reliable dividend payer that sports an attractive yield of around 4%. The stock also has a very reasonable valuation right now. With analysts forecasting earnings of 47.8p for FY2020, the forward-looking P/E ratio is just 12.4. It’s worth noting analysts at Citigroup just raised their price target for BAE to 670p – 13% higher than the current share price.

Imperial Brands

Tobacco giant Imperial Brands (LSE: IMB) burnt me last year as it fell nearly 30%. It was the worst performer in my dividend portfolio by a long way. Yet I’m not going to give up on the stock just yet. I remain convinced that, on a P/E ratio of around seven, it’s significantly undervalued and capable of a decent rebound at some stage in the near future. It’s worth noting that directors have been buying here in recent months, which is generally a bullish signal.

One of the big attractions of Imperial is its colossal yield. Just recently, the group hiked its dividend by another 10% (its 11th consecutive 10% hike) to 206.6p per share which, at the current share price, equates to a yield of 10.5%. I’ll point out there’s a chance we could see the dividend cut at some stage (analysts at RBC said earlier this week they were looking for a ‘dividend reset’), however, even if the group cut its dividend by 50%, you’re still looking at a 5%+ yield, which is high in today’s low-interest rate environment.

St. James’s Place

Finally, I also like the look of wealth management group St. James’s Place (LSE: STJ). It currently offers a prospective yield of about 4.5%.

One reason I like St. James’s Place is that I expect the demand for trusted, face-to-face financial advice to remain strong in the years ahead due to the fact that the UK’s Baby Boomers are retiring (and accessing their pensions) in droves.

Given that economic uncertainty remains elevated, and interest rates on savings accounts remain abysmally low, I think plenty of retirees will need financial advice. It’s worth noting STJ has a client retention rate of 96%, which suggests clients are happy with its services.

St. James’s Place isn’t the cheapest stock in the FTSE 100 – currently the forward P/E ratio is 23.5. However, I think the stock is worth a premium. Analysts at Deutsche Bank – who recently described STJ as the “leading company in a growth industry” – believe the company can deliver around twice the market growth rate, due to “strong adviser growth and controlled outflows.”

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Edward Sheldon owns shares in BAE Systems, Imperial Brands, and St. James's Place. The Motley Fool UK has recommended Imperial Brands. 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.