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£2,000 to invest in dividend shares? I’m looking at these 2 FTSE companies for my ISA

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May has so far been another volatile month in broader equity markets. There is still a high level of coronavirus-related uncertainty around the globe. Yet, it’s also an opportune time for long-term investors to buy into dividend stocks such as BHP (LSE: BHP) or Contour Global (LSE: GLO). Both shares are a lot cheaper than they were in January. 

I’d do further due diligence on these two businesses, as I believe they stand a good chance of achieving earnings growth. By buying these dividend superstars at discounted prices now, Stocks and Shares ISA investors are likely to make sizable total returns in their retirement portfolios. In addition to their dividends, I believe these two companies may also have relatively solid upside in their share prices.

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BHP is an international giant

Since March, scores of public companies have cut or suspended their dividends. But there are still many FTSE 100 corporations with juicy payouts. And mining and metals giant BHP is one of them.

Year-to-date, BHP shares are down about 12% and the dividend yield stands at 7.5%. The group’s website highlights that “the BHP dividend policy provides a minimum 50% payout of Underlying attributable profit at every reporting period”.

According to a recent analyst note from Credit Suisse, BHP dividends are likely to be safe. The shares are expected to go ex-dividend in September.

The company has operational units in coal, copper, iron, ore and petroleum. Like other resources stocks, the BHP share price can fluctuate widely in response to commodity pricing, as well as global supply and demand levels.

For example, the iron ore spot price has overall remained stable throughout the Covid-19 pandemic. China is one of the major customers for the product. So there may be volatility if China’s demand levels fluctuate in the coming quarters. Yet BHP’s strong balance sheet will likely enable the group to weather any further choppiness in commodity prices and demand levels.

I’d consider buying the dips.

GLO stock may glow in your portfolio

FTSE 250 member ContourGlobal is a power generation business. It owns and operates 107 power plants in 18 countries. 

The group’s Renewable Energy Segment uses hydro, solar, wind and biogas to generate 1,808MW of electricity. And the Thermal Energy Segment uses gas, coal and oil as fuels to generate 2,509MW of electricity.

In mid-May, the firm posted a robust Q1 with revenues up 24% to $356m and operating income 24% higher to $76m. Profit got a boost from recent acquisitions in Mexico and Spain. And the group operates a cash generative business as the vast majority of revenues are contracted over a number of years.

Its current stock price of 172.6p supports a dividend yield of 7.2%. And the shares are expected to go ex-dividend in August. In its latest trading update, CEO Joseph Brandt said: “I am pleased to confirm the first quarter dividend payment of 4.0591 cents per share, maintaining our commitment to a 10% annual increase in dividends and which reflects our strong and predictable cash flow generation”.

So far this year, GLO shares are down about 17%. I believe its trailing P/E ratio of 51 is still on the rich side. Therefore I’d look to buy the shares if they fall further, especially toward the 150p level. So I’ll monitor the stock for now.

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tezcang 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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