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Forget Brexit! 2 FTSE 100 dividend stocks I’d buy in my ISA to retire on

It’s quite likely that TUI Travel (LSE: TUI) should thrive in spite of ongoing Brexit-related tension. I’ve spoken before how imminent trade negotiations with the European Union, and the fallout of such talks, could hamper the UK economy in 2020 and potentially beyond.

But TUI’s geographic wingspan is broad and this should protect it against any catastrophic Brexit consequences for domestic economic conditions. Besides, the failure of Thomas Cook last autumn should also support UK revenues even if broader consumer spending patterns slump. The removal of this key rival in the package holiday space certainly provides excellent long-term opportunities.

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In fact, City analysts expect earnings momentum to pick up soon at the FTSE 100 firm. An 11% bottom-line rise is expected for the fiscal year to September 2019. And estimates improve to 26% for the following financial period.

With these perky predictions come tips that dividends will keep heading northwards too, resulting in jumbo yields of 4.2% and 4.9% for fiscal 2019 and 2020 respectively. Combine this with a low forward P/E ratio of 10 times and I reckon TUI is a steal at current prices.

Strength in depth

I consider Bunzl (LSE: BNZL) to be another brilliant stock pick despite the threat of more Brexit uncertainty. In fact, I consider it to be one of the best defensive stocks in times of geopolitical and macroeconomic turbulence like these.

The support services business operates all over the globe — it trades in 31 countries, in fact — although its single-largest market is the US. It generates 58% of group revenues from the North American territory.  This compares with the less-than-15% that it sources from the UK and Ireland.

It also provides a range of goods that are essential for everyday life, from food packaging and hard hats to bandages and carrier bags. And it supplies to a broad range of sectors. These are qualities that give its earnings-making capabilities another layer of protection. Indeed, Bunzl estimates that almost three-quarters of total turnover comes from what it describes as “resilient” sectors.

Strong and stable

Fresh trading numbers released last month proved just how durable the FTSE 100 share is. Back then it alluded to the “slowing underlying revenue growth” it has endured of late on account of “mixed macroeconomic and market conditions.” As well as Brexit, of course, revenues have been hit on rising fears over global growth, concerns exacerbated by trade tensions between the US and China.

But despite these issues, Bunzl said that it expected sales to have risen between 2% and 3% in 2019. It’s this sort of resilience that has seen profits charge broadly higher over the past quarter of a century, and the business has hiked dividends every year for 26 years as a result. And City brokers expect dividends to keep rising over the medium term. This results in inflation-beating yields of 2.5% and 2.6% for 2020 and 2021 respectively.

There are bigger yields out there, sure, as well as better-looking shares on a value basis. At current prices Bunzl carries a forward P/E ratio of 16.6 times. But the prospect of sustained profits and dividend growth still makes it a brilliant buy right now.

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Royston Wild owns shares of Bunzl. 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.