Two magnificent FTSE 100 shares for an ISA

Buying shares in an ISA is a smart investment strategy, in my book. In this type of account, all earnings and income generated are absolutely tax free.

Here, I will highlight two high qualities FTSE 100 Shares I see as a great investment for ISA in 2023. Both shares have generated impressive results for investors over the long run and I’m currently attractively priced today.

Amazing company

The first is Diageo (LSE: DGE). It is the owner of Johnny Walker, Tanqueray, Smirnoffand many other well-known alcohol brands.

Diageo is an outstanding company and from a long-term investment perspective, there is a lot to like about it.

For starters, it has a strong competitive advantage, thanks to its brand. The brand leads to repeat purchases from consumers, which in turn leads to consistent sales. They also give companies pricing power, which is practical in an inflationary environment.

Second, it has growth potential. Diageo generates a large share of its sales in the world’s emerging markets. As revenues rise in these markets over the coming years and decades, demand for the premium alcoholic beverages produced by Diageo should increase.

Third, it has a high return on capital, which gives you the power to reinvest for future growth.

Finally, it has the best dividend record, having produced annual payments for more than 20 years. The current yield is about 2.2%.

Unfortunately, the company will lose its CEO Ivan Menezes, who has held the top role for ten years. Menezes has done an outstanding job as the head of the company, so it may be missed.

But overall, I see this stock as a top investment.

The expected price-to-earnings (P/E) ratio here is currently about 20, which I think is reasonable for a company of Diageo’s quality.

World class business

Another FTSE 100 Stock I want to highlight as a good investment for ISA is London Stock Exchange Group (LSE: LSEG). It is the infrastructure of financial markets and data businesses.

This is another company with a strong competitive advantage. The monopoly position in the operation of the British financial market is one. Ownership of FTSE Russell (the FTSE and Russell indices are some of the most well-known financial market indices in the world) other. This competitive advantage means that competitors cannot easily steal market share.

It is also a company with a lot of potential. One source of growth here could be a recently announced partnership with a tech giant Microsoft. Going forward, the two companies will work together to develop artificial intelligence (AI) and cloud-based data and analytics solutions. The London Stock Exchange believes that the partnership will increase revenue growth”with meaning“Over time as new products come on-stream.

A risk to consider here is that the investor consortium is included Blackstone and Thomson Reuters (which is selling data provider Refinitiv to the group in 2021) sold London Stock Exchange shares at this time to reduce the size of its stake in the company. This could preserve the stock price gains in the near term.

Once the sale is complete, I think the stock price could go down. The current expected P/E ratio is only 23, which is relatively low for a quality financial technology company.