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I’d hold this 9% FTSE 100 dividend yield in my ISA for at least 10 years!

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If you’re looking for FTSE 100 dividend stocks to buy for your ISA, then I highly recommend taking a closer look at insurance giant Legal & General (LSE: LGEN).

I believe this company has all the hallmarks of a blue-chip income champion.

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Today, I’m going to explain why I believe the business has the potential to provide investors with a steady stream of income for the next 10 years. 

FTSE 100 dividend yield

Legal is one of the largest financial services firms in the UK. It provides asset and pension management services to millions of customers across the country. 

I think this business model makes the company one of the best income stocks on the FTSE 100.

Managing pension assets requires a long-term view and a conservative approach to business management. Investors have to be sure that when they deposit their money with the pension giant, it will still be there several decades later when they come to retire. 

This means Legal can’t take too many risks. That’s good news for both the company’s customers and its investors. It also suggests the firm won’t payout more than it can afford in dividends. As such, I think the current 9% dividend yield is sustainable. And here to stay. 

Look to the long term 

Legal’s long-term business model is the primary reason why I think this FTSE 100 dividend stock could be a good investment for the next 10 years. 

Buying the shares inside a Stocks and Shares ISA will also yield tax benefits. Indeed, income or capital gains earned on assets held inside these wrappers are not taxable. You don’t even need to declare the income on your tax return. 

This is particularly helpful for investors who own high-income stocks like Legal. For example, an investment of £10,000 in the insurance giant would yield a tax-free income of £900 a year, based on its current dividend yield. 

Capital growth

I’m also optimistic about the capital growth opportunities for the business. As the UK economy continues to grow, the total value of pension savings is also increasing. Legal’s size has helped it capture a large share of the UK pension market and, as it continues to grow, this trend should continue.

The group can offer it services at a lower cost than competitors, thanks to economies of scale. Also, as noted above, the organisation’s size and diversification act as a competitive advantage. Customers can entrust their assets to the business safe in the knowledge it’s unlikely to collapse overnight. 

As more and more customers turn to the group to manage their assets, profits should continue to grow. This should lead to higher earnings per share, which will drive the stock price higher in the long term. 

Therefore, if you’re looking for an income and growth investment to buy and hold for the next decade, I think it’s certainly worth considering this FTSE 100 giant for your portfolio. 

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Rupert Hargreaves 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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