2 FTSE 100 dividend stocks I'd buy before the ISA deadline

The recent sell-off across the FTSE 100 index has presented dividend investors with a number of compelling investment opportunities. Here's a look at two stocks that I believe have strong long-term potential and are worth buying at current levels.  

Unilever 

Ever popular Unilever(LSE: ULVR) has not escaped the recent market sell-off. Trading above 4,100p in mid-January, the shares dipped below 3,700p in late March. 

There are several reasons why the stock has fallen in recent months. First, the pound has risen against the dollar, offsetting Unilever's international earnings. Second, with talk of rising interest rates, investors have rotated out of the group of stocks known as 'bond proxies'. These are stocks that have safe, predictable earnings and offer dependable income streams. As interest rates rise, the dividend yields on these stocks become less valuable. Third, the sell-off across global markets has affected all sectors. There has been nowhere to hide. 

Unilever shares have recovered slightly in the last week after UBS upgraded the stock to 'buy', yet still remain under 4,000p. At the current share price, I believe they offer value for long-term investors. When you consider that the stock is now trading below the level that Warren Buffett was prepared to pay for the company just over a year ago, I figure the shares have to be worth a closer look at present. 

Britain's own Warren Buffett, portfolio manager Nick Train, agrees. Train says that investors shouldn't make the mistake of conflating growth companies with bond proxies. He points out that Unilever has compounded its dividends by 8% pa since 1952 and that government bonds do not do this. 

While Unilever trades on a relatively expensive forward P/E of 19.2, Train argues that a valuation of that level for a company of Unilever's quality is justified. In fact, he argues that "exceptionally rare" companies that can compound earnings steadily for decades, such as Unilever, can justify P/Es of 30, 40 or even higher. 

With 60% of its sales coming from emerging markets, Unilever has the potential to keep compounding its earnings for decades to come. Now is a good time to get on board, in my view. 

DS Smith 

Another company I'm bullish about right now is DS Smith(LSE: SMDS). The £5bn market cap FTSE 100 company is a leading provider of packaging, operating in 37 countries and counting Amazon UK as a key customer.  

As a packaging specialist, DS Smith is benefitting from the exponential rise in e-commerce. Over the last three years, revenue and net profit have climbed 18% and 49% respectively. And the key acquisition of Interstate Resources last year, which provides the group with valuable US exposure, should provide firepower going forward. In a March trading update, CEO Miles Roberts stated: "We are excited by the structural drivers supporting the growth of sustainable packaging and the opportunities for DS Smith. Our outlook therefore is positive and we remain confident in the future."

The shares spiked higher in early March after rival Smurfit Kappa received a takeover approach, yet since then have pulled back with the market. At the current share price, the stock trades on a forward P/E of 13.6 with a prospective yield of 3.5%. On those metrics, I rate the stock as a 'buy'. 

Buy-And-Hold Investing

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Edward Sheldon owns shares in Unilever and DS Smith. The Motley Fool UK owns shares of and has recommended Unilever. 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.

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