£1,000 to invest? 2 FTSE 100 shares I’d buy in an ISA

If you have £1,000, or any other amount, to invest in an ISA, I think the best course of action could be to buy a basket of FTSE 100 stocks.  With that in mind, today I’m going to outline two blue-chip stocks that could be perfect for ISA portfolios of […]

If you have £1,000, or any other amount, to invest in an ISA, I think the best course of action could be to buy a basket of FTSE 100 stocks. 

With that in mind, today I’m going to outline two blue-chip stocks that could be perfect for ISA portfolios of any size. 

FTSE 100 income

Telecommunications group Vodafone (LSE: VOD) is one of the FTSE 100’s most reliable income stocks.

The group is one of the world’s largest telecoms businesses, with operations around the world. It is also one of the most integrated international companies.

For example, the organisation’s users in the UK can access its network across Europe for free. Many of its mobile phone contracts for UK customers come with access to more than 80 different markets as standard. 

International diversification is Vodafone’s most significant competitive advantage.

The FTSE 100 company has also come into its own in the coronavirus crisis. Management’s focus on building a high-quality data network around the world has helped its customers stay connected in uncertain times. 

This will translate into profits next year, forecasts suggest. City analysts are expecting the group to report net income of €1.8bn in 2021. It lost €920m in 2020. Earnings will expand nearly 40% in 2022, according to analysts. Based on these projections, the stock is trading at a forward price-to-earnings (P/E) multiple of 13.4. 

In addition, the income stock currently supports a dividend yield of 7.4%. That’s double the FTSE 100 average and extremely attractive in the current interest rate environment.

The dividend is backed by stable cash flows from Vodafone’s telecoms network. Therefore, I reckon investors can depend on this income stream in uncertain times. 

WPP

I’m also interested in marketing giant WPP (LSE: WPP). The world’s largest advertising group by sales recently said that the first six months of 2020 were extremely tough. However, its latest trading update also noted that its performance had improved since the height of the coronavirus crisis.

This rebound gave management confidence to reintroduce the FTSE 100 company’s dividend, after suspending it at the beginning of the crisis.

After this move, WPP has become one of the first large companies to restore its dividend this year. The payout is small compared to historical distributions, but at 10p per share for the first half, it’s better than nothing.

Analysts reckon management will target a 22p distribution for the full year, that would give a dividend yield of 3.6% on the current share price. 

As well as its attractive income credentials, shares in WPP also look to offer a wide margin of safety. The stock is currently changing hands at a forward P/E of 8.7, that’s significantly below the market average of 14. 

As such, it looks as if shares in the FTSE 100 giant have the potential to produce high total returns for investors in the years ahead for a combination of income and capital growth. 

There’s another company I would consider buying for an ISA portfolio today, and it is outlined in the free report below.

The high-calibre small-cap stock flying under the City’s radar

Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…

You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.

And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.

Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.

But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before!

Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge!

More reading

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.

The post £1,000 to invest? 2 FTSE 100 shares I’d buy in an ISA appeared first on The Motley Fool UK.

ASNF

Next Post

5WPR announces the launch of a new legal technology practise

Mon Sep 7 , 2020
5WPR’s tech practice has grown to specialise in several highly-technical areas and prides itself on being a leading ad tech, mar-tech and fintech public relations firm in the nation, boasting three fintech companies valued at over US$1bn 5W Public Relations (5WPR), one of the largest independently owned PR firms in […]