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Forget the Cash ISA! I’d buy these FTSE 100 dividend growth stocks without delay

The best flexible Cash ISA on the market right now offers an interest rate of just 1.3%. This dismal rate of interest doesn’t even match inflation, which suggests savers using these products will lose money over the long run.

As such, the FTSE 100 seems to offer much better income solutions. What’s more, recent market declines have only increased the appeal of blue-chip dividend stocks.

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With that in mind, here are two FTSE 100 dividend growth stocks that offer a higher level of income than the best Cash ISA on the market today.

Diageo

Global drinks giant Diageo (LSE: DGE) is one of the world’s largest consumer goods companies. While the business has warned its profits will come under pressure due to the COVID-19 outbreak, over the long run, it’s unlikely the business will see a sustained drop off in demand.

Therefore, now could be the time for savvy long-term investors to pick up a share in the group at an attractive price. Indeed, at the time of writing, the stock is trading at a price-to-earnings (P/E) multiple of 20.7. That looks cheap, compared to the multiple of 30 times earnings investors were willing to pay just a few weeks ago.

On top of the stock’s discount valuation, it also offers a dividend yield of 2.7%, at the time of writing. The distribution is covered 1.9 times by earnings per share. It has grown at a compound annual rate of nearly 6% over the past decade.

As Diageo’s earnings should grow in line with inflation and the global population over the long term, it seems as if the business can maintain this dividend growth.

Sage Group

Accounting software provider Sage Group (LSE: SGE) is a relatively unique business. Changing accounting software providers can be a time-consuming and costly business. There’s also the risk of incurring substantial fines if you lose data and end up getting your taxes wrong.

As such, customers don’t tend to switch very often, and this gives the group a stable, recurring revenue stream. That’s excellent news for the company’s investors. Sage’s stable income stream means management has long-term visibility over cash flows and can set the dividend accordingly.

The dividend has increased at a compound annual rate of 7% over the past six years. At the time of writing, the stock supports a dividend yield of 2.5%. The payout is covered 1.7 times by earnings per share.

With earnings per share set to increase by around 10% over the next two years, there’s plenty of scope for this payout growth to continue as well. Therefore, if you’re looking for a dependable dividend growth stock, Sage could be worth your future research time.

What’s more, after recent declines, the shares are trading at a modest discount to the firm’s long-run average. The current P/E of 23 compares favourably to the stock’s five-year average of around 25.

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The Motley Fool UK has recommended AstraZeneca and Sage Group. 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.