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I’d buy these 7%+ FTSE 100 dividend stocks for my ISA for May

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The FTSE 100 is shooting back towards 6,000 points on Monday. Lockdown measures in many parts of the world are being steadily lifted, also lifting investor sentiment. It’s hoped this end-of-month rally can be extended into May too, with more quarantine rollbacks anticipated.

Share investors clearly need to remain on high alert though. Rising infection rates could stop the lockdowns being eased, or result in barriers being put back up. The possibility of a second wave of deadly infections later in 2020 should be front and centre in their minds.

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That said, there’s an abundance of Footsie shares I reckon are great buys for May. Their long-term profits outlooks remain robust despite the Covid-19 crisis. And, at current prices, I reckon they’re too cheap to miss.

Make the connection

One such blue-chip I’d happily load up on now, or in the coming days, is Vodafone Group (LSE: VOD). This is a FTSE 100 share that not only trades on a rock-bottom forward price-to-earnings growth (PEG) reading of 0.5 times. It carries a monster 7.3% dividend yield too.

Telecoms providers are a particularly attractive sector to buy into today. They aren’t immune to the economic implications of the coronavirus breakout. But the more defensive nature of their operations mean they’re in a stronger position than many to weather the storm. This is especially important, given the aforementioned uncertainty over future infection rates and the potential need for more lockdowns.

Vodafone should be on the radar of income investors too, given the steady stream of dividend cuts across UK stock markets. The benefit of its recurring revenues, allied with the strength of its balance sheet, puts it in great shape to keep doling out mighty shareholder payouts, despite the current crisis.

The FTSE 100 company remained on course to generate whopping free cash flow (excluding spectrum auction costs) of €5.4bn in the financial year to March, according to February’s most recent financials. Vodafone is a brilliant lifeboat in these uncertain times, in my opinion.

Screen of price moves in the FTSE 100

Another FTSE 100 favourite

Phoenix Group Holdings (LSE: PHNX) is another low-valued big-cap I’d buy today. A prospective price-to-earnings (P/E) ratio of 8 times seriously undervalues the insurance giant’s long-term outlook. And a corresponding dividend yield of 8.3% is one of the biggest on the FTSE 100.

Insurance is, like telecoms, one of the more robust stock sectors in times of social, economic and political chaos like these. But this isn’t the only characteristic Phoenix shares with Vodafone. A critical quality for dividend chasers, Phoenix is also a formidable generator of cash. In 2019, cash generation came in at a whopping £707m, beating a goal of £600m-£700m.

Phoenix’s aim is to grow cash generation up to a possible £900m in 2020 too. But don’t think of the business as a great buy for the short-to-medium term. Its imminent £3.2bn acquisition of ReAssure will create the country’s biggest life insurance and pension provider with the clout to pursue an exciting growth path. I’d happily buy this income hero for my ISA too.

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Royston Wild has no position in any of the shares mentioned. 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.

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