Investing a £20k ISA in these 2 dividend stocks would give me income of £100 a month

Annual ISA deadlines are looming fast and now seems like a good time to buy FTSE 100 dividend stock.

The banking crisis caused more confidence and now some of my favorite stocks are even cheaper, with shares in sales and marketing companies. DCC (LSE: DCC) up 7.33% on a weekly basis.

Stocks go down, yields go up

DCC’s share price has been struggling even before this week’s problems, down 27.04% in one year and 37.83% in five years. However, it is now a tempting entry point as it is currently trading at just 10.1 times earnings.

A declining stock price doesn’t automatically mean good things, but I’m as optimistic as management wants to be “another year of strong operating profit growth”despite the challenging situation.

In November, DCC reported a 13% rise in operating profit to £221m, driven by strong organic growth and new acquisitions. The board raised its interim dividend by 7.5%.

DCC is currently yielding a solid 4.1%, up from 3.9% when I looked at it last month. It is guaranteed 2.4 times by earnings.

I could secure a bigger return than the current FTSE 100, but DCC management has an impressive track record of shareholder payouts. If I invested half my ISA allowance today, I would make a profit of £410 in the first year. Hopefully more in the future.

The big concern is whether the recession will take a toll on profits as struggling clients cut back on marketing spending. This will cause the stock price to fall further and may force management to freeze, cut, or eliminate the dividend. I think this risk is reflected in the lower price.

FTSE 100 paper and packaging group the world (LSE:MNDI) also had a tough week, with shares down 7.18%. Again, that seems to be part of more selling, rather than a stock-specific issue.

Recession worries remain

But Mondi has taken a hit as cash-strapped consumers order fewer cardboard-wrapped items online. The stock is down 17.55% in one year, and 35.14% higher in five years.

One challenge is the wood prices “level up” due to sanctions on Russian and Belarusian timber supplies. However, Mondi expects them to weaken as the year progresses and supplies from Finland.

The yield has jumped from 4.4% to 4.7% in a few weeks, with a cap of 2.8. If I invest the remaining £10k from my ISA allowance, that will give me an income of £470 in year one. With Mondi’s yield forecast to hit 6% next year, I’ll be getting more.

If we get a recession, DCC and Mondi shares could go down again. Since I plan to continue for at least 10 years, and more, I can wait to bounce back.

If I invest £20k before April 5, I can expect an income of £880 in the first year, or £73.33 per month. Not bad. Both stocks are now in the frame for the next buy. Now let’s see what the next week brings.