Forget the top Cash ISA rate. I’d buy FTSE 100 dividend stocks in an ISA today

first_img Enter Your Email Address Savers have experienced a hugely challenging decade. Interest rates declined to historic lows following the financial crisis, and have failed to offer a significant rise ever since. This has caused many savers to fail to generate an above-inflation return on their cash, which has reduced their spending power.Looking ahead, interest rates could stay at low levels over the coming years. Risks such as Brexit and low inflation may mean that policymakers retain a loose monetary policy.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…As such, at a time when the FTSE 100 yields 4.4%, now could be the right moment to invest in large-cap dividend shares instead of relying on savings to generate a passive income.Income potentialAt the present time, it’s difficult to obtain an income return which is above 1.5% on your cash savings. By contrast, around a quarter of the FTSE 100’s members have dividend yields that are in excess of 5%. As such, it’s entirely feasible that an investor could build a portfolio of large-cap shares which, together, provides a dividend yield above 5%, or even in excess of 6%.Furthermore, many of those companies are likely to increase their dividends in the coming years. The world economy is forecast to grow at an impressive rate in 2020 and beyond, while many large-cap shares have solid balance sheets and strong cash flows that can sustain an above-inflation rise in shareholder payouts. Therefore, the difference in returns available through FTSE 100 dividend stocks and cash savings could become more pronounced over the long run.Growth prospectsAlongside their income potential, FTSE 100 dividend stocks also offer capital growth prospects. As mentioned, the FTSE 100 has a dividend yield of 4.4% at the present time. This is above its long-term average yield, and suggests the index offers good value for money. Alongside this, sectors such as banking and retail are relatively unpopular at the present time, and could present opportunities for investors to buy undervalued stocks.The track record of the FTSE 100 shows that while it does experience challenging years, in the long run it has historically offered capital returns that are in excess of 5.5% on an annualised basis. As such, holding your shares over a long-term time period could mean that there’s a relatively high chance of them increasing in value.Managing riskClearly, the risks attached to FTSE 100 shares are higher than for a Cash ISA at the present time. But, through identifying solid businesses with strong balance sheets, you may be able to avoid riskier stocks that could cut their dividends or fail to offer capital growth in the coming years. And, by diversifying across a range of companies, you can cut your risks even further so that the risk/reward opportunities within your portfolio are greater than for a Cash ISA. Image source: Getty Images. Forget the top Cash ISA rate. I’d buy FTSE 100 dividend stocks in an ISA today Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Peter Stephens 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.center_img “This Stock Could Be Like Buying Amazon in 1997” Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. 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