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Forget a Cash ISA. I’d buy these 2 FTSE 100 dividend stocks to make a passive income

With the interest rates on Cash ISAs generally being less than inflation at the present time, buying FTSE 100 dividend shares could be a worthwhile move.

It could improve your passive income today, enable you to obtain a growing income return in the coming years, and provide scope for impressive capital returns in the long run.

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With that in mind, here are two FTSE 100 stocks that offer a mix of improving income returns and share price recovery potential.

Bunzl

International distribution and support services company Bunzl (LSE: BNZL) has experienced a challenging period. Its most recent trading update highlighted the difficult macroeconomic conditions it faces in many of its markets. As such, its adjusted revenue is expected to have increased by just 1% for the full year.

Looking ahead, Bunzl is forecast to post a fall in its bottom line of 1% this year, while a 2% rise in 2021 suggests that further challenges could be ahead.

However, this could mean that the stock is a worthwhile buying opportunity. It currently trades on a price-to-earnings (P/E) ratio of 15.4, which is below its long-term average rating. This suggests that it offers a margin of safety following its share price fall over the past year.

In addition, it has a dividend yield of 2.8% that has scope to improve as a result of Bunzl’s dividend being covered 2.4 times by net profit. And since the company has a number of acquisition opportunities in its pipeline following the £120m it spent in 2019 on buying businesses, its long-term growth rate in sales and profit could improve. As such, now may be the right time to buy a slice of the stock while investor sentiment is relatively weak.

BP

Another FTSE 100 share that has fallen out of favour with investors in recent months is BP (LSE: BP). The oil and gas company has, like many of its peers, experienced highly challenging operating conditions in recent quarters. Oil and gas prices have fallen, and could continue to do so, as fears surrounding the prospects for the world economy have caused demand growth to slow.

BP now offers a dividend yield of 6.9% following a disappointing period for its share price. While further challenges may be ahead, and its bottom line could fail to improve significantly in the short run, its dividends are due to be covered 1.3 times by net profit this year. This suggests that there is ample headroom for the business when making shareholder payments, and that they may prove to be more resilient than the dividends of some of its sector peers.

The stock’s P/E ratio of 11.2 suggests that investors may have priced in the uncertainty facing the oil and gas industry. As such, now could be the right time to buy it for the long term.

A top income share with a juicy 5% forecast dividend yield

Income-seeking investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this out-of-favour business that’s throwing off gobs of cash!

But here’s the really exciting part…

Our analyst is predicting there’s potential for this company’s market value to soar by at least 50% over the next few years...

He even anticipates that the dividend could grow nicely too — as this much-loved household brand continues to rapidly expand its online business — and reinvent itself for the digital age.

With shares still changing hands at what he believes is an undemanding valuation, now could be the ideal time for patient, income-seeking investors to start building a long-term holding.

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Peter Stephens owns shares of BP. 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.