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ISA investors! I think now’s the time to buy this FTSE 100 6.5% dividend

Do you have some spare investment cash burning a hole in your pocket? Thinking of ways to use your new £20,000 annual allowance in your Stocks and Shares ISA? I can reflect on dozens of FTSE 100 shares that are worthy additions to any investment portfolio.

Global share markets recorded some of their meatiest monthly gains in April. But the falls of late last month and early May indicate that investor confidence remains brittle as biscuits. Hopes and fears surrounding the Covid-19 crisis is causing buying and selling activity to oscillate wildly. It’s a subject that threatens to keep stock markets volatile for some time yet.

Screen of price moves in the FTSE 100

It’s why an army of share investors prefer to sit on the sidelines rather than take the plunge. This is one of the worst things you can do. Firstly, the key to successful share investing is to take a long-term view on a stock’s profits potential. Possible price movements in the immediate future should have little to no impact on whether you choose to buy or not.

And secondly, there’s a galaxy of great Footsie stocks that are trading on rock-bottom earnings multiples right now. A number of blue-chips are on my personal watchlist following recent heavy selling.

A fallen FTSE 100 star

One of these fallen FTSE 100 shares is SSE (LSE: SSE). This is an equity that has fallen around 25% in value since selling fever gripped financial markets around 10 weeks ago. And it’s a fall that fails to reflect this company’s exceptional defensive characteristics which should enable it to ride out the pandemic-related economic collapse.

A downturn in the local economy usually leads to a subsequent drop in electricity demand as business output drops. But of course, the UK’s need for power isn’t going to fall off a cliff. This puts SSE in better shape to ride out the consequences of the Covid-19 breakout. A fresh round of fundraising earlier this month has solidified the balance sheet over the more immediate term though.

6% dividend yields!

But as I say, let’s look past the near future and consider SSE’s position over a longer time horizon. The company’s moves to embrace ‘greener’ energy will make it essential in helping government plans to create a greener economy. Yet I don’t believe this Footsie firm and its brilliant profits opportunities for this decade and beyond are reflected at current prices.

Right now, SSE sports a forward price-to-earnings (or P/E) ratio of 13.5 times. It carries a mighty 6.5% dividend yield too. Any sort of yield is welcome given that UK blue-chips continue to hack down their payout policies left, right and centre. But this yield would be impressive at any other time too (the Footsie average sat closer to 4% at the turn of 2020). With the business having finally hived off its troublesome retail operations, this is a stock I reckon is a top buy for the new decade.

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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.