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I’d buy these dividend-paying FTSE 100 bargains in an ISA today

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After the stock market crash, I think these FTSE 100 bargain dividend stocks should tempt investors looking to use their new Stocks and Shares ISA allowance.

While other FTSE 100 companies have dumped their dividends, these three are holding firm for now. That reflects their strong balance sheets and healthy cash generation. You can buy them at bargain prices too.

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Two FTSE 100 bargains

Like most FTSE 100 stocks, the Anglo American (LSE: AAL) share price took an absolute beating at the start of the crash. It had warned of lower iron ore and coal production due to the global lockdown. It also paused its Woodsmith polyhalite project in the UK, just days after completing the purchase of Sirius Minerals.

Despite that, it’s stood by its dividend, which currently offers investors a yield of 5.5%, with generous cover of 2.49 times earnings.

So far, mining giants have been relatively good at maintaining dividends, with Rio Tinto and BHP Group continuing to pay. This also makes them top FTSE 100 bargains as well. The natural resources sector seems to be under less political pressure to scrap payouts than, say, the banks.

Where the Anglo American share price goes next depends on how rapidly the global economy starts to recover, particularly China. The country is still the main source of demand for commodities such as metals and minerals, and is showing signs of recovery, according to the IMF.

The road to recovery will be bumpy. But even if the Anglo American dividend is cut at some point, I still think it remains a strong long-term buy and hold. Especially since its shares are almost 40% cheaper than before the stock market crash.

The South Africa-focused mining specialist’s strong balance sheet and relatively low net debt of £3.6bn make it look like a true FTSE 100 bargain today.

A progressive dividend hero

The Diageo (LSE: DGE) share price also looks tempting right now. I’m clearly not the only one who thinks so. This dividend stock is up 20% over the last couple of weeks, but I still think it’s a FTSE 100 bargain worth buying at today’s higher price.

Diageo is exactly the type of company investors should be aiming at in the middle of a stock market crash. It has a strong market position, with a host of premium brands including Baileys, Guinness, Smirnoff and Johnnie Walker, and loyal customers.

Net debt of around £11.5bn, around 2.6x EBITDA earnings, is manageable for a company with a market-cap of £64bn. Sales may take a short-term hit as some drinkers feel the financial squeeze, but others will need a drink or three to survive the lockdown.

The Diageo yield looks low at 2.7%, but it’s nicely covered 1.76 times by earnings. Management policy is progressive, so you can expect plenty of dividend growth in the longer run, once we get beyond the current crash.

I reckon every portfolio could benefit from a shot of Diageo. Especially at today’s bargain price.

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

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