There are lots of great FTSE dividend shares trading at bargain prices right now, but I cannot afford to buy them all. But two stocks have battled their way to the top of my watchlist for 2023. Once I have cash to spare, I will swoop.

The last five years have been bumpy for the FTSE 100 so I am impressed to see how well Anglo American (LSE: AAL) has performed. While the index as a whole trades just 2.2% higher in that time, this diversified miner is up a thumping 142%. It is even up 17.71% in the last 12 troubled months.

Hunting for dividend shares

Despite this, the share price looks dirt-cheap, trading at just 5.6 times earnings. It currently yields a bumper 7.1%, covered 2.5 times by earnings. As ever, there is no guarantee it will continue at that level. Forecasts suggest it could fall to around 5%, but that still looks attractive to me.

Mining stocks have benefited from this year’s surge in commodity prices, while being dogged by fears that Chinese Covid lockdowns and a global recession may hit demand. This could go either way in 2023, but I am investing with a 10- or 20-year view.

With that in mind, today’s low valuation looks like an attractive entry point. As an added bonus, its De Beers diamond unit has been performing strongly.

Anglo American comes with risk attached, as does every stock, yet I feel the outlook is promising, once we see the back of the recession. Electrification and the shift to renewables will boost demand for copper. I will reinvest my dividends to buy more stock until we have lift off.

I would balance this by investing in FTSE 100 paper packaging products group DS Smith (LSE: SMDS), which in contrast has struggled. Its share price is down 38.74% measured over five years, and 17.28% over the last year.

The rise of e-commerce has boosted demand for its corrugated packing but rising raw material and energy prices have driven up input costs. EPS have fallen in three of the last five years.

I like this solid income stock

Management suspended the dividend during the pandemic but it returned in 2021, and currently offers a solid 4.9% yield, covered twice. DS Smith looks good value following its recent share price troubles, trading at 10 times earnings. I am encouraged to see it is expected to report at least £400m of underlying operating profit in Thursday’s half-year results.

DS Smith has pricing power in a tough market, something not every company can boast right now. It generates plenty of cash which should hopefully sustain future dividend growth in 2023 and for years after that. On the other hand, the cost-of-living crisis could hit demand as consumers feel the squeeze.

The £4.25bn group has benefited from the falling pound, as it generates 85% of its sales overseas. However, sterling is now on the up and that could turn into a headwind. Yet I would still buy DS Smith, encouraged by its strong balance sheet. Net debt is just £1.5bn, down from £1.8bn last year. That is a comfort as interest rates rise.

The post 2 top FTSE dividend shares I’d buy for regular income in 2023 appeared first on The Twelfth Magpie.

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Harvey Jones doesn't hold any of the shares mentioned in this article. The Motley Fool UK has recommended DS Smith. 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.

Berkeley (FY22 earnings)

Berkeley (LSE: BKG) is a British property developer and housebuilder. It mainly builds homes and neighbourhoods across London, Birmingham, and the South of England. The company is expected to release its FY22 earnings results for the year ending April 2022 on Wednesday 22 June.

The FTSE earnings preview indicates slight growth, as the housebuilder is expected to have capitalised on higher house prices. Nonetheless, analysts are predicting that if the outlook for FY23 comes in below consensus expectations, Berkeley shares may be in for a tough time.

DS Smith (FY22 earnings)

DS Smith (LSE: SMDS) is a British multinational packaging business. It offers sustainable, plastic-free packaging, integrated recycling services, and sustainable paper products. The firm is expecting to report earnings for the year ending April 2022 on Wednesday 21 June.

Analysts at Jefferies Financial Group recently reduced their EPS estimates for DS Smith. Morgan Stanley, Credit Suisse, and JP Morgan all reduced their price targets as well. So, if DS Smith can beat its earnings estimates and provide a positive outlook, its share price could recover. Otherwise, a further drop in its stock is to be expected.

Safestore (H1 22 update)

Safestore (LSE: SAFE) is the UK’s largest and Europe’s second-largest provider of self-storage. It has over 120 locations in the UK. The FTSE 250 firm is forecasted to report its earnings results for the six-month period ending April 2022, on Tuesday 21 June.

However, Safestore’s first-half earnings results are yet to be officially announced on its earnings calendar. Nonetheless, these are the figures to look out for. Analysts in the UK don’t normally publish earnings previews for six-month periods, so it’s best to compare the firm’s upcoming 2022 first-half numbers to the ones from a year before. The H1 22 figures can also be useful to determine whether it’ll outperform its FY21 numbers, or even beat analysts’ FY22 forecasts.

The post FTSE earnings preview: Berkeley, DS Smith, Safestore appeared first on The Twelfth Magpie.

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John Choong has no position in any of the shares mentioned at the time of writing. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool UK has recommended DS Smith. 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.

A far better move in my book is to focus on those companies with decent growth prospects, brands, and/or a large addressable market. These are the stocks that stand a better chance of rebounding in time. And if you’ve got many years of investing ahead of you, where better to stash them than in a tax-efficient Stocks and Shares ISA?

Here are three examples from the top tier that catch my eye as potentially great buys for the eventual recovery.

An ageing world

Smith & Nephew (LSE: SN) specialises in making medical devices. More specifically, it produces hip and knee implants, products to help with fractures and bone deformities and instruments to repair and remove soft tissue. With populations ageing, I think this makes it an ideal candidate for a long-term ISA hold.

In addition to its growth potential, Smith & Nephew also has a presence in more than 100 countries around the world. This makes it very geographically diversified and, consequently, a safer pick than more domestically-focused FTSE 100 companies. Its balance sheet also looks pretty solid to me. 

Like most, shares in Smith & Nephew have rebounded strongly since mid-March. Whether this positive momentum can be sustained remains to be seen. As a racier alternative to more income-focused healthcare stocks, however, I think it takes some beating. 

Growth play

Corrugated packaging firm DS Smith‘s (LSE: SMDS) share price wasn’t exactly in sparkling form before the coronavirus crisis. That said, I think this could prove another great buy for the future.

Smith’s packaging solutions are used to move food and personal care items to supermarket shelves or deliver goods to customers’ homes. Coronavirus hasn’t stopped this, suggesting that earnings should stay fairly stable. Factor-in the ongoing explosive growth of e-commerce and holders of the stock should be sitting pretty for many years to come.

Like Smith & Nephew, DS Smith has a wide geographical spread. It operates in 37 countries around the world. It’s also a nice play on the sustainability trend. The business is looking to manufacture 100% reusable or recyclable packaging by 2025.

Firms operating in dull industries rarely hit the headlines. They do, however, have a habit of generating great returns over time. I think this could prove to be the case here.

FTSE 100 stalwart

And finally, Diageo (LSE: DGE). Pubs and restaurants may still be closed but this hasn’t turned us into a nation of teetotallers. Indeed, supermarket sales of alcohol jumped last month as people were forced back into their homes for their own safety.

Will this be sufficient to offset the damage caused to revenues by the lockdowns for firms like Diageo? It’s unlikely. Nevertheless, the fact that demand hasn’t dried up means it’s likely to be in a better place post-coronavirus compared to index peers making hardly any money. 

Markets could be set for a further leg downwards but I wouldn’t dissuade anyone from building a stake as things are. Diageo’s share price remains roughly 25% lower than the highs hit in August last year. That feels an attractive entry point for the owner of established brands such as Guinness, Smirnoff and Captain Morgan.

The post 3 FTSE 100 growth stocks I’d buy for the recovery appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo and DS Smith. 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.

Here are three I think could make committed ‘buy and hold’ investors a lot of money over the next decade.

The robots are coming

If you believe the tabloids, many of us face near-certain redundancy as machines take over the world. Sensationalist headlines aside, it does feel like the trend towards automation is only going to get stronger as the years pass. Using robots for repetitive, mundane tasks does, after all, free up more time for humans to focus on more important work. 

One way of getting exposure is through the L&G Global Robotics and Automation ETF. This invests in a basket of 90 companies, all of whom generate a “material proportion of their revenues” from the industry. Fees are high, relative to your average FTSE 100 tracker, but this has been more than compensated for by the growth seen to date (+62.6% over the five years to December 31, 2019).

An alternative would be the iShares Robotics and Automation UCITS ETF which has a lower ongoing charge and slightly less concentrated portfolio. 

Going electric

The fact US manufacturer Tesla eclipsed £100bn in value last week should give some indication of just how excited investors are over the electric car revolution. 

This enthusiasm makes sense. Assuming the consensus forecast is right, there’ll be approximately 30m such vehicles on the roads in 2030. Right now, there are only 3m. 

You could, of course, just invest in Tesla (although be prepared for a bumpy ride). An alternative would be to buy into companies providing services to the global automotive industry, such as UK-listed AB Dynamics. 

For those with strong stomachs, there’s also the option to invest in businesses that specialise in mining for metals that will be essential to this market. Electric cars will, for example, require roughly three times the amount of copper needed in conventional vehicles. Nickel is likely to be a central component of the batteries that power them. 

While there are few funds currently dedicated to tracking this trend, iShares does offer a way in through its Electric Vehicles and Driver Technology UCITS ETF. With 95 holdings, the fund is sufficiently diversified and has a reasonable ongoing charge of 0.4%. 

Climate crisis

From the push for retailers to use less plastic, to the growing popularity of veganism, to using more environmentally-friendly ways of generating power, tackling climate change has become a priority.

Looked at purely from an investment perspective, this is potentially great news for a number of UK-listed firms. FTSE 100 member and corrugated packaging specialist DS Smith could be a big beneficiary, particularly as more and more of us are choosing to shop online. With its growing vegan range, high street baker Greggs could also be a tasty long-term hold. 

When it comes to renewable sources of energy, a relatively cheap exchange-traded fund might be best option, particularly as identifying the long-term winners in this space arguably requires more specialist knowledge.

Blackrock’s again offers such an option with its iShares Global Clean Energy UCITS ETF. The fund rose a little under 44% in 2019 alone, highlighting just how lucrative going green is becoming.

The post 3 megatrends for the next decade (and how to invest in them) appeared first on The Twelfth Magpie.

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Paul Summers owns shares of AB Dynamics, Greggs, and LEGAL & GENERAL UCITS ETF PUBLIC LIMITED COMPANY ROBO GLOBAL ROB&AUTO GO UCITS ETF (GBP). The Motley Fool UK owns shares of and has recommended Tesla. The Motley Fool UK has recommended AB Dynamics and DS Smith. 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.

DS Smith

FTSE 100-listed international packaging company DS Smith (LSE: SMDS) has seen its share price swing about lately, up 50% over five years, but down 26% over the last two.

It is down another 3% today, even though its half-year results proclaimed “record group profitability and return on sales despite economic headwinds”, along with market share gains and margin improvements. However, it was hit by difficult conditions for its industrial customers in the German car industry.

This £5bn company is a global operation, with major interests in Europe and the US, where it is posting volume increases and new business wins. Its return on sales ratio rose by 11%, a sign that it is growing efficiently. This was right at the mid-point of its recently upgraded target range of 10%-12%.

It said this reflects its focus on value-added packaging and strong pricing discipline, together with good progress and synergy delivery from its recent Europac acquisition, which more than offset “the reduced margin in North America as a result of lower pricing for paper export”. Its Indiana greenfield box plant is now operational.

Group CEO Miles Roberts anticipates acceleration of volume growth in the second half of the year, “assuming current macro-economic conditions prevail”. Recent share price disappointment has left the stock trading at just 10.9 times forward earnings, which is in bargain territory for a company that continues to grow strongly.

DS Smith offers a healthy yield of 4.4%, covered 2.1 times, exactly in line with the FTSE 100 average. A 14.5% return on capital employed is okay, although not spectacular. You could say the same about forecast earnings growth, predicted to be 5% in the year to 30 April 2020, followed by 2% the year after. That is quite a slowdown given that earnings grew by double-digits in four of the last five years. I still reckon it looks a solid prospect, while Rupert Hargreaves thinks it’s a dividend hero.

Smurfit Kappa

Another FTSE 100 packaging provider, Smurfit Kappa Group (LSE: SKG), has had a slow year share-price-wise, trading at roughly the same level as 12 months ago. It still trades 100% higher than it did five years ago, though. Can it regain that momentum?

The £6.29bn multinational is turning green concerns to its advantage, with CEO Tony Smurfit saying that as consumers increasingly demand sustainable packaging solutions, the group’s unique applications, knowledge and expertise in paper-based packaging leaves it “ideally positioned to take advantage of this mega trend”.

With 46,000 employees across more than 35 countries, the Smurfit Kappa share price is underpinned by geographical diversification. Latest figures show EBITDA earnings up 11% to €1.26bn for the nine months to September.

That said, City analysts expect earnings to remain flat this year, and fall 3% in 2020, with the pace of revenue growth slowing as well. The forecast yield is 3.8%, well covered 2.7 times. Fool colleague Manika Premsingh has questioned whether Smurfit Kappa can maintain its margins as prices soften, and is worried about its debt-funded acquisition spree. However, both of us believe the long-term picture remains promising.

The post £2k to invest? Then I’d take a look at these 2 FTSE 100 growth stocks appeared first on The Twelfth Magpie.

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• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended DS Smith. 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.

With this in mind, I’m going to outline three of my favourite FTSE 100 dividend stocks that all yield more than 5% and I believe you can buy and hold forever.

Unforeseen risks

My first pick is RSA Insurance (LSE: RSA). The insurance company tends to fly below most income investors’ radar, but I believe the stock deserves a position in your portfolio. 

Over the past six years, RSA’s dividend has grown at a compound annual rate of 16%. During the same time frame, earnings per share have grown at a compound annual rate of 22.3%.

City analysts expect this trend to continue. They’ve pencilled in earnings growth of 25% for 2019, followed by growth of 19% for 2020. The dividend is expected to grow by 20% and 19%, respectively, in these years.

One of the reasons why I like RSA as an income investment is that the company provides an essential service. For most people, property insurance is a crucial expenditure, and the market is only growing.

With this being the case, I think RSA should be able to continue to grow in line with the market for many years to come and distribute a healthy amount of its income to investors along the way.

Defensive income

My second buy-and-hold-forever income play is Sainsbury’s (LSE: SBRY). While shares in this supermarket giant have come under pressure recently, due to concerns the group is struggling for direction, I think long-term prospects for this company are bright.

Food and household supplies are necessities and, as one of the largest retailers in the country, Sainsbury’s will always have a captive audience.

Still, as noted above, the group’s growth is something to worry about. Analysts think earnings per share will decline by 16% in 2019, due to rising costs and falling sales. However, the company’s dividend is covered 1.9 x earnings per share, which suggests the distribution is safe for the time being.

With a dividend yield of 5.2% at the time of writing, investors will be paid to wait for the company’s turnaround to take hold. On top of this, the stock is currently trading at an attractive multiple of just 10.1 times forward earnings, around 30% below the industry average.

Booming market

My final income pick is DS Smith (LSE: SMDS). Over the past six years, this packaging producer has built itself into one of the largest in Europe, through a combination of sensible acquisitions and organic growth.

During this time, net profit has grown at a compound annual rate of 14%, and revenue has increased at an annual rate of 9%. Shareholders have been exceptionally well rewarded since 2014 as well. The dividend has grown at a compound annual rate of 12%. 

As long as DS keeps doing what it has been doing successfully for the past six years, I think the stock will continue to produce impressive returns for shareholders for the foreseeable future.

Today, you can own a stake in this company for just 10 times forward earnings. City analysts are predicting earnings growth of 26% for its current financial year. The shares currently support a dividend yield of 4.7%.

The post 3 FTSE 100 dividend stocks yielding 5%+ I’d buy and hold forever appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended DS Smith. 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.

For me, equities are always a better bet for those wanting to generate a better return from their savings. This is particularly the case when you have companies like Lloyds Bank (LSE: LLOY) paying big dividends. That said, today’s statement from the FTSE 100 financial powerhouse hasn’t been particularly welcomed by the market. No prizes for guessing why.  

PPI hit

Thanks to being the most exposed to the scandal of all the UK banks, it’s unsurprising Lloyds was hit by a surge in PPI claims before the 29 August deadline. As a result, the £1.8bn charge over Q3 had a knock-on impact on pre-tax profit for the period, which came in at just £50m. This, in turn, has led Lloyds to report profits of only £2.9bn over the nine months of 2019 — a 40% reduction on the £4.93bn achieved in the previous year.   

Although it’s making progress in other areas — full-year operating costs are now expected to be lower than the £7.9bn previously estimated — some investors may have also become unsettled by the cautious outlook. Looking ahead, Lloyds said it “remains well-positioned… to continue delivering for customers and shareholders,” but that ongoing economic jitters could still impact the business. 

Of course, a single set of numbers shouldn’t have much effect on those investing for income, especially as Lloyds currently yields 6%, based on a forecast 3.4p per share cash return this year. That’s 300% more than you can get with a Cash ISA.

With the PPI disaster soon to be in the past and dividends likely to be safely covered by profits, I maintain the bank warrants consideration from anyone understandably frustrated by their below-inflation Cash ISA returns. Right now, the shares also trade on just 7 times expected earnings — cheaper than FTSE 100 peers Barclays (8) and HSBC (11).

Safely covered

Another FTSE 100 stock whose dividends put the typical Cash ISA rate to shame is packaging firm DS Smith (LSE: SMDS). Today’s pre-close trading update for the first half of its financial year contains no horrors as far as I can see. Indeed, the lack of any shocks since its last statement at the beginning of September has led the company to stick with its expectations on its performance over the period.

A combination of “strong pricing discipline and cost improvements, together with modest box volume growth” should allow Smith to report “good margin progression” for the period, despite ongoing economic concerns in markets such as Germany. 

Having won new contracts in the US and Europe, volume growth will likely be “progressive” during H2. The company also reported that the integration of Europac was progressing smoothly and that it expected to complete the sale of its Plastics division by the end of 2019. 

Like Lloyds, DS Smith has an undemanding valuation at the time of writing, with shares trading at 10 times forecast earnings. That looks an attractive entry point to me, especially as the stock also comes with a likely 16.9p per share cash payout in this financial year. That translates to a very respectable 4.7% dividend yield, covered over twice by profits. 

The post I’d avoid the Cash ISA nightmare and buy the Lloyds Bank share price instead appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended DS Smith and Lloyds Banking Group. 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.

Although no actual numbers were provided in today’s statement — covering the period since the beginning of May — CEO Miles Roberts stated that demand for the company’s solutions remained strong and that “highly resilient” fast-moving consumer goods companies and e-commerce clients should allow the £5bn cap to achieve volume and market growth.

The standard reference to “macro-economic uncertainty” was given, but a commitment to reducing costs alongside new business wins in Europe and across the pond should help to pick up the slack from markets where the firm has noted a drop in demand, such as the export-focused, at-risk-of-recession Germany.  In other news, the integration of Europac — acquired last year — is progressing “very well” and the sale of the company’s Plastics division is expected to conclude before the end of 2019. 

Overall, it seems there’s little for those currently holding to be concerned about. For anyone looking to add the company to their portfolios, the stock was changing hands on a little over 9 times forecast FY20 earnings before trading commenced this morning. That’s cheap relative to the market as a whole and also very slightly cheaper than listed peers Mondi and Smurfit Kappa. In addition to this, DS Smith offers the highest yield of the three at 5%, covered over twice by profits. Importantly, the company also has an unbroken run of dividend hikes over the last decade — something I think investors should pay more attention to. 

Despite having lost a third of its value since this time last year, I continue to think the company is anything but a value trap and that the shares could be a great buy for the medium-to-long term once the current headwinds have abated.

Dependable dividends

But DS Smith isn’t the only top tier stock offering what appear to be sustainable dividend payments and trading at a decent valuation. Defence giant BAE Systems (LSE: BA) ticks the same boxes.

Similar to its FTSE 100 peer, BAE has established a reputation for hiking its cash returns every year. Sure, the odd 2%-3% isn’t anything for income aficionados to get particularly excited about, but a gradual increase is preferable to those firms yielding close to double-digit percentages that are ultimately forced to cut them. A potential 23p per share cash return leaves the stock yielding almost 4.2% at the current share price. 

Based on its most recent set of figures, there doesn’t seem any reason to think that these payouts are in danger. Back in July, the company estimated that FY underlying earnings per share growth would be somewhere in the mid-single-digits when compared to the 42.9p achieved in 2018. Higher costs incurred in H1 are also expected to be taken care of by lower tax rates and “improved operational performance“.

BAE’s valuation is hardly demanding either with the shares trading on a forward price-to-earnings (P/E) ratio of 12. That’s fairly average for the FTSE 100, but good within its sector and the company’s average valuation over the last five years (18).

The post These FTSE 100 dividend hikers look too cheap to me appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended DS Smith. 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.

Home improvement supplies

B&Q and Screwfix owner Kingfisher (LSE: KGF) describes itself on its website as an “international” home improvement company with 1,331 stores in 10 countries across Europe, Russia and Turkey.

One of the reasons I like the share right now is that a new chief executive is due to start in the autumn, and I think new top management can bring with them a period of positive change if they arrive with vigour, determination and insight. I also like Kingfisher’s dividend. With the recent share price at 222p, the yield runs just below 5% for the current trading year to January 2020, and the price-to-earnings multiple is about 10.

I think the valuation looks undemanding but reflects the flat trading we’ve seen from the firm for a few years. In May, with its first-quarter update, the firm reported sales up 1.7% in constant currency. Perhaps the new chief can find a way to drive further growth from where we are now. If not, that dividend income could keep piling up for shareholders anyway.

Packaging

Corrugated and plastic packaging supplier DS Smith (LSE: SMDS) delivered a pleasing set of full-year results in June. Chief executive Miles Roberts said in the report that the outcome demonstrated the firm’s “growing scale and strategic progress in key markets.”

He explained the firm is gaining market share “throughout” Europe particularly with customer-companies who produce fast-moving consumer goods. And in the US, operations are going well after a recent acquisition. Indeed, the firm has a strategy designed to grow the business both organically and via acquisitions.

Roberts said the firm has a differentiated offering that combines well with solid underlying demand for corrugated packaging. Despite uncertain general economic conditions, the outlook is positive. 

Meanwhile, with the share price close to 383p, the shares change hands on a forward-looking price-to-earnings ratio of just over 10 for the current trading year to April 2020. The anticipated dividend yield runs close to 4.5%. I think the valuation looks attractive.

I admit these aren’t the most exciting enterprises on the stock market, but I think the dividend payments could combine with steady operational progress to produce decent total returns over the next few years. Sometimes dull-looking businesses can produce decent returns. I’d be happy to add both stocks to my diversified retirement portfolio today with the intention of holding for the long haul.

The post Got £2k to invest in the FTSE 100? I’d choose these 2 dividend shares appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any share mentioned. The Motley Fool UK has recommended DS Smith. 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.

Wealth creator

St James’s Place (LSE: STJ) is one of the largest and fastest-growing wealth managers in the UK. The company has more than £100bn in assets under management, and several thousand wealth advisors working for the group across the country.

There’s a steady stream of UK independent wealth managers and advisors who are giving up independent operations and moving to companies like these. These bigger businesses can handle the rising compliance demands and extra costs most wealth managers now have to comply with better than independent operators. This flow of advisors is bringing a steady stream of business to St James’s. The advisors usually bring their customers with them, who are then encouraged to invest in the group’s range of funds.

So far, this approach seems to be working exceptionally well. As St James’s has grown over the past 10 years, shares in the company have surged higher. Investors who bought the wealth manager 10 years ago have seen an annualised return of 21.2%, including dividends, on their money.

Its dividend growth has been particularly impressive. The firm’s payout to investors has grown at a compound annual rate of 25% for the past six years. The stock currently supports a dividend yield of 4.7%. As more and more people turn to St James’s to manage their money, I believe the trend of growing dividends and the rising share price will continue. This the perfect income stock for Stocks and Shares ISA, in my mind.

Booming market 

I’m also positive on the outlook for corrugated packaging producer DS Smith (LSE: SMDS). Just as I believe the steady flow of wealth managers moving to St James’s will continue to drive the group’s growth, I reckon the booming demand for e-commerce will continue to drive growth at DS.

As e-commerce has boomed over the past five years, the demand for packaging has also exploded. Its is just one of the handful of companies that have been able to profit from this trend. If City analysts’ forecasts are to be believed, the firm will earn a net profit of £475m in its current financial year, up nearly 200% in six years. On top of organic growth, DS has completed a steady stream of acquisitions over the past few years. These deals have helped the group reinforce its position in some markets, while it expands into others.

The net result of this organic and bolt-on expansion is that DS’s earnings per share have grown at a compound annual rate of 13% since 2013, while the dividend per share has risen at 12%. Right now, the stock trades at a discount forward P/E of 10.5 and yields 4.5%. I think this is a bargain price to pay for this packaging business that doesn’t look as if it will slowing down anytime soon.

The post £1,000 to invest in the FTSE 100? Here are 2 dividend stocks I’d buy for an ISA right now appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended DS Smith. 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.