Healthcare services

In the oil-rich nations of the Gulf Cooperation Council, the FTSE 100’s NMC Health (LSE: NMC) operates as a private healthcare provider. The company has been growing fast both organically and via acquisitions while throwing out some decent-looking annual advances in the numbers for revenue and earnings.

Over the past five years, revenue has shot up almost 300% and earnings have moved around 285% higher. Over that period, shareholders have enjoyed a more than 400% advance in the share price at today’s 2,491p. The shares did go higher than 4,000 in the summer of 2018 but have since dropped back.

I think the correction is a good thing because it takes some froth out of the valuation. Big growth stories like this tend to attract wide attention from investors, and part of the rise in the stock happened because of a valuation up-rating. Indeed, NMC was priced for growth.

And growth remains firmly on the agenda. City analysts following the firm expect earnings to advance by percentages measured in the high twenties to early thirties this year and next year. Back in March in the full-year results report, chief executive Prasanth Manghat said the company “remains ideally positioned to capitalize on growth opportunities in its key markets.”

Meanwhile, we can pick up a few of the shares on a forward-looking earnings multiple for 2020 of just over 15. Given the growth on offer, that valuation works for me, and I’m tempted to slip a few shares into my retirement portfolio to hold for the long term.

Paper-based packaging

In today’s world, it’s hard for me to imagine the demand for paper-based packaging drying up, which is one reason I’m keen on the FTSE 100’s Smurfit Kappa Group (LSE: SKG). The company’s website explains that the firm is a big producer of corrugated packaging, containerboard and ‘bag in box’ in Europe, and is the only “Pan-American” producer of containerboard and corrugated packaging.

Over the past five years, revenue has grown around 15%, but the company has managed to squeeze out a more than 100% rise in earnings. Shareholders have been rewarded for the firm’s success with a lift in the dividend of about 85% in the period. On top of that, the share price trades just over 100% higher than it did five years ago.

In May, chief executive Tony Smurfit said in a trading update: “While there is invariably political and economic risk, we confidently expect to deliver another year of progress.”

We’ll get a further update regarding the outlook with the half-year results due on 31 July. Meanwhile, the shares trade with a forward-looking earnings multiple just over 10 for 2020 and the anticipated dividend yield is around 3.7%. I’m tempted by the stock.

The post 2 FTSE 100 stocks I’d buy for my ISA right now 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 NMC Health. 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.

As such, instead of saving through a Cash ISA, buying FTSE 100 dividend stocks with bright income investing outlooks could be a better idea. Although they may come with the risk of capital loss, their superior income prospects may make their risk/reward ratios more enticing for long-term investors.

With that in mind, here are two FTSE 100 stocks that appear to offer impressive income investing outlooks.

Smurfit Kappa

Packaging specialist Smurfit Kappa (LSE: SKG) has made a strong start to its financial year, according to its most recent investor update. The company is focused on delivering further efficiencies that could improve its competitive advantage versus its peers, while also expanding its geographic reach. This could help to reduce the risks that the company faces from localised economic and political uncertainty.

With the company currently having a dividend yield of around 4.3%, its income returns are almost three times higher than those of a Cash ISA. Furthermore, with dividends being covered around 2.7 times by profit, there is scope for shareholder payouts to increase at a rapid rate over the medium term without hurting the financial strength of the business.

Since Smurfit Kappa trades on a forward price-to-earnings (P/E) ratio of around 8, it seems to offer a wide margin of safety. As such, now could be the right time to buy it.

Schroders

Global investment manager Schroders (LSE: SDR) also appears to offer an impressive income investing outlook. In the short run, the wider asset management sector could experience a challenging period. Uncertainty surrounding political and economic issues, such as a US/China trade war and Brexit, may weigh on the performance of a wide range of asset prices.

However, with the company’s shares trading on a P/E ratio of around 12.5, they seem to offer a margin of safety. Furthermore, a dividend yield of over 4% suggests that the stock has income investing appeal following an annualised rise in dividends of 10% over the last four years.

With Schroders having dividend cover of two and being forecast to post a rise in earnings of 5% this year, its income investing outlook appears to be positive relative to many of its index peers. Its focus on developing a wealth management opportunity that provides greater access to private clients could act as a catalyst on its financial performance at what is a time of change for the wider industry. Therefore, buying its shares with a long-term view could be a shrewd move at the present time.

The post Forget a Cash ISA! I’d buy these 2 bargain FTSE 100 dividend growth stocks right now appeared first on The Twelfth Magpie.

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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.

Smart package

The stock is up around 1.5% today after the group posted a 25% rise in first quarter EBITDA earnings to €424m, largely due to higher corrugated pricing and demand growth, while revenues grew 7% to €2.3bn.

Management praised “a very strong first quarter performance” and frankly, it needed it, because the share price has crashed 25% over the past 12 months. The withdrawal of Memphis-based International Paper’s takeover bid, concerns over a crackdown on paper packaging and fears of overcapacity all played a part in that. Some have also been worried by rising net debt, used to fuel an acquisition spree. Smurfit also took a €1.3bn hit when exiting strife-torn Venezuela.

Today’s results reflected “higher corrugated pricing, demand growth, a relentless focus on cost efficiencies and the benefits of our capital programme”. The group, which operates across 35 countries and posted total revenues of €8.9bn in 2018, has been growing nicely in Europe, as well as Colombia, Mexico and the US, and is stretching its geographic reach to Bulgaria and Serbia through acquisitions.

Dividend growth

Smurfit Kappa is combating environmental concerns through its Better Planet Packaging initiative to develop more sustainable, biodegradable packaging, which should also help defend the business against its eco-critics.

Group CEO Tony Smurfit hailed “an excellent start to the year” and expressed his confidence in delivering another year of progress. The stock currently offers a forward yield of 4.4%, generously covered 2.9 times, which offers hope of future progression. The dividend has almost doubled from €0.55 to €0.98 per share over the last five years, which is a good sign. Royston Wild sees plenty to like, too. The wider concern is that a global slowdown could hit packaging demand.

Paper tigers

Fellow FTSE 100 member Mondi (LSE: MNDI) is also in the global paper and packaging business and has had a similar bumpy ride, its share price down 17% over the past year but up almost 75% over five. Like Smurfit, it is fully integrated, right down to managing forests, and is working hard to make packaging more sustainable.

The difference here is that net debt isn’t a worry. Mondi has a return on capital employed of 18%, which my colleague Roland Head shows that money spent on its recent expansion is delivering good value. 

Wrapped up

The dividend looks promising with a forecast yield of 4.1%, covered 2.4 times. Mondi has a 22.4% return on capital employed, which is solid. Recent share price slippage has reduced the valuation to just 10.1 times earnings, which is a tempting entry price.

That could make it marginally more attractive than Smurfit. Although I notice that City analysts expect earnings per share growth for both stocks to flatten over the next couple of years. Perhaps they’re worrying about that global slowdown too.

The post Should I buy Smurfit Kappa’s shares after today’s 25% earnings surge? appeared first on The Twelfth Magpie.

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Harvey Jones 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.

Imperial Brands

Let’s start with tobacco manufacturer Imperial Brands (LSE: IMB). It’s perhaps not a stock for everyone given its ‘sin stock’ attributes, yet in the current low-interest-rate environment, I think IMB is hard to ignore given its dividend yield of 7.8%.

I last covered IMB in mid-January when its share price was 2,400p. At the time, I said I’d buy the stock while it was cheap. Since then, the shares have climbed 9.4%, which is a good return in two-and-a-half months. Yet at the current share price, I continue to see a lot of value on the table as the stock’s forward P/E is still under 10.

The thing about stocks is that they can trend way too far in both directions. Often, a stock, sector, or index will climb far too high as investors get overly excited about its future prospects, before crashing far too low as investors panic. And I think that’s what we’ve seen with the tobacco sector in recent years. Go back to mid-2016 and tobacco stocks were sporting P/E ratios in the low-to-mid 20s. That was too high in hindsight. Yet now, IMB and BATS both trade on P/Es under 10. I see that as too cheap and personally think that a P/E of 12 to 16 is fair for these kinds of dividend-paying stocks.

Interestingly, Citigroup just upgraded UK tobacco stocks to ‘buy’, stating: “The shares could still rise a long way because we think the environment will continue to look less threatening.” The broker also upgraded its price target for IMB from 2,700p to 3,000, implying 14% upside.

Yes, there are risks to investing in the tobacco sector. Smoking rates are declining and increasing regulation adds uncertainty. Yet ultimately, I think that IMB has been beaten down too far and that at current levels, the stock offers the potential for capital gains as well as big dividends.

Smurfit Kappa

Another sector that has been beaten down too far in my view is packaging. Concerned about the possibility of a global recession, investors have dumped high-quality packaging stocks in recent months and I think this has created compelling investment opportunities.

One FTSE 100 packaging stock that I like right now is Smurfit Kappa (LSE: SKG) – a leading provider of corrugated packaging with a focus on sustainable products. In my view, the shares look very cheap at present.

This year, analysts expect SKG to generate earnings of €2.97 per share, which at the current price, puts the stock on a forward P/E of just 8.75. That kind of valuation provides a nice margin of safety for investors in my opinion. A prospective dividend yield of 3.8% looks attractive too, and it’s worth noting that the dividend payout is expected to be covered by earnings nearly three times.

SKG released full-year results in mid-February and the numbers looked decent. Revenue increased 4%, pre-exceptional earnings per share surged 58%, and free cash flow increased 61%. Moreover, management hiked the dividend by 12%.

Overall, I see a lot of value here and think that Smurfit Kappa could reward investors with capital gains and solid dividends going forward.

The post 3 days until ISA deadline. 2 FTSE 100 dividend stocks I’d buy today appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in Imperial Brands. The Motley Fool UK has recommended Imperial Brands. 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.

The asset manager’s performance remains resilient despite weakness across global investment markets and total inflows in 2018 rose 8% to £15.7bn, according to financials released last month. But inflows slowed markedly in the final two months and pointed to a much tougher climate that it’ll have to navigate this year. 

What’s encouraging, though, is the way St. James’s Place is able to offset the worst of these tough conditions through its impressive client retention skills. It’s one of the reasons why City analysts still expect earnings to keep growing this year and next. And in my opinion it’s in great shape to keep growing profits over the long term as it expands its operations to latch onto growing demand for investment advice in the UK.

Dividend chasers will be cheered by news that dividends are expected to keep growing over the medium term too, and a chubby 5.4% for 2019 is available to tap into right now because of the anticipated 51.5p per share total payout.

Flying high

Airlines have been suffering from increased fuel costs over the last year, putting immense pressure on margins. International Consolidated Airlines Group (LSE: IAG) is expected to see earnings flatline on a year-on-year basis by City brokers in reflection of these obstacles, with the cheap airfare environment in Europe predicted to add some strain too.

Despite this, the FTSE 100 flyer is still anticipated to keep raising the annual dividend and a total reward of 31 euro cents per share is being tipped, a figure that creates a gigantic 4.2% yield. Its increasing exposure to the rocketing budget segment is setting it up to deliver strong profits growth in the years ahead, as are the measures it is taking to boost its fleet size and route network. I’m confident that it will have the confidence and the strength to continue hiking dividends long into the future.

Its failure to snap up Norwegian Airlines may have been disappointing but tough conditions for Europe’s budget flyers will no doubt present fresh opportunities for IAG to expand its operations through acquisition activity.

Board games

Concerns over developing oversupply in the containerboard market may have smashed Smurfit Kappa Group’s (LSE: SKG) appeal with investors last year, but its rising share price more recently suggests that the investment community has finally woken up and smelt the coffee.

The threat of rising supply from Chinese producers is a setback but it’s by no means catastrophic for the likes of Smurfit Kappa. Through the strength of its market-leading products, as well as its broadening geographic footprint (it made significant acquisitions in France, The Netherlands and Serbia last year alone), it can continue to command strong demand from its customers, in my opinion.

Besides, it’s doubling down on efforts to boost profit margins and helped by recovering input costs, these jumped 280 basis points in 2018 to 17.3%, providing more reason to be optimistic over its long-term growth prospects.

City analysts are predicting additional dividend raises for 2019, to 102 euro cents per share. And this creates a tasty 3.9% yield.

The post 3 top FTSE 100 dividend stocks I’d buy right now appeared first on The Twelfth Magpie.

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Royston Wild 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.

The paper-based packaging provider has a lot of defensive characteristics and an awesome record of raising its dividend, which is up more than 230% over the past six years. And there’s been strong support for those dividend payments from robust-looking cash inflow, which has been rising a bit each year. Earnings have been well covered by that torrent of cash. The business looks strong to me, and that makes it a decent candidate for my income portfolio.

Out with the bathwater

Yet the share price plunged more than 40% between the end of August 2018 and mid-December in what is starting to look like a baby-out-with-the-bathwater move. Indeed, the firm posted some impressive financial figures with its full-year results today, and the shares have been clawing their way back up since the beginning of the year – and rightly so.

The share price sits at 2,342p as I write, and it’s looking perky today on the news. At that level, the price-to-earnings ratio runs just above nine and the dividend yield at about 3.7%, which I think is attractive given the firm’s long history of moving its dividend payment higher each year.

If the market was expecting a cyclical slowdown from Smurfit Kappa, it will be surprised by how upbeat today’s report is. The company’s worldwide operations delivered a 4% increase in revenue during 2018 with an underlying rise of 7%. Free cash flow shot up 61% and adjusted earnings per share moved 58% higher. The directors expressed their confidence in the outlook by pushing up the final dividend for the year by 12%.

There’s been a good showing on quality metrics for a long time, and the return-on-capital figure improved even further in the period, rising from 15% up to more than 19%. One slightly negative figure is that net debt moved 11% higher to €3,122m. However, that could have been affected by “significant” acquisition activity, which saw the company acquire businesses in France, the Netherlands and Serbia.

A positive outlook

Chief executive Tony Smurfit explained in the report that the firm has been transforming itself in “recent years” and delivering “progressively superior returns.” I think there’s proof of that in today’s figures. Looking forward, Mr Smurfit said he is “always conscious of macro-economic risk,” but he believes the company is “well positioned to capitalise on industry opportunities.”  

There’s no sign of any weakness in trading and I see the fallen share price now as an opportunity to buy into that rising dividend at a reasonable price. The firm is expanding and I’d be happy to hold the shares with a long-term investing horizon in mind. 

The post Why did the market mark down this attractive FTSE 100 name? I’d buy! appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any share 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.

St. James’s Place

St. James’s Place (LSE: STJ) is a wealth management group that offers advice to individuals, trustees, and businesses. Through a network of nearly 4,000 expert advisers, the company offers services such as investment planning, retirement/pension planning, risk protection, and inheritance planning. The group is clearly good at what it does, as its client retention rate is consistently above the 95% mark.

What I like about St. James’s Place is that the company looks very well placed to help retiring baby boomers with their financial planning requirements in the coming years. The financial environment is challenging at present (low interest rates, volatile stock markets, changing regulation, Brexit uncertainty) and for this reason, I’m convinced that demand for trusted face-to-face financial advice will remain robust in the years ahead. Just last week, the group advised that it continues to see “growing demand” for advice and that it remains “extremely well placed” to continue growing over the medium term.

From a dividend-investing perspective, STJ offers a lot of appeal at the moment, in my view. Last year, the group paid out 42.9p per share in dividends, which equates to a yield of 4.4% at the current share price, and for FY2018, analysts expect a 12% rise in the payout to 48.1p per share, which translates to a yield of 5%. It’s worth noting that the group has an excellent dividend growth history and has never cut its dividend. With the stock down around 20% over the last six months on the back of equity market weakness and currently offering a fantastic yield, I think now is the time to take a closer look.

Smurfit Kappa

Another FTSE 100 dividend stock that has experienced share price weakness over the last six months is Smurfit Kappa (LSE: SKG). It’s a packaging company that has a focus on sustainable products and operates 350 production sites across 33 countries.

One reason I like Smurfit shares is that I’m bullish on the long-term prospects for the packaging sector due to the important role packaging plays in e-commerce. If you buy something large online these days, it’s almost certain to come in some kind of cardboard box, so packaging companies essentially offer an indirect way to profit from the increasing popularity of online retailers such as Amazon, Argos, and ASOS. The fact that SKG is focusing on 100% renewable products is another advantage, as that is clearly the direction the world is going in.

Smurfit Kappa has increased its dividend substantially in recent years and analysts expect another 7% hike for FY2018, taking the payout to €0.94, which equates to a healthy yield of 3.8% at the current share price. The stock has been sold off recently on the back of global recession fears, although I think the sell-off has been excessive. Trading on a P/E of 8.6, I see a lot of value on offer at present.

The post Two FTSE 100 dividend stocks I’d buy before February appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Edward Sheldon owns shares in St. James's Place. 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.

Stock markets have been in retreat since the autumn, and the valuations of some of the underlying businesses look attractive. Dividend yields have been driven up and it is potentially a great time to buy shares as long as you don’t believe that a 2008-style general economic collapse is just around the corner. I don’t, so I’m hunting for shares right now.

Digesting a big acquisition

Global software company Micro Focus International (LSE: MCRO) has seen its share price plunge around 45% over the past year. A profit warning in March did the most damage and arose because the firm was having trouble integrating its gargantuan $9bn acquisition of Hewlett Packard Enterprises’ software business.

However, in a trading update released during November, the firm said revenue was on an “improved trajectory” in the second half of the year to October 2018, albeit set to come in around 6% lower than the previous year. Meanwhile, the shares value the firm at an earnings multiple around nine and the dividend yield is near 5.8%. I think that looks like decent value and it could be worth collecting the dividend while waiting for a return to growth.

Braced to ride the cycle

Private equity and infrastructure investment company 3i Group (LSE: III) said in its half-year results report in November that it is not “immune to market developments,” but the directors believe that “careful asset management and clear strategic focus” leaves the portfolio“better positioned than in the past.”

Many of the firm’s investee companies operate in cyclical sectors such as retail and the headwinds in such sectors have been well reported. But 3i reckons its balance sheet strength will help it “withstand market turbulence.” The firm plans to hold investments for longer if necessary, which would enable it to ride the dips and exit investments on the peaks of the cycle later. Meanwhile, a forward price-to-earnings multiple just over six and a dividend yield a little higher than four seem to factor in the uncertainty in the outlook.

Trading well, yet the stock market is nervous

One prominent victim of the stock market sell-off has been paper-based packaging products manufacturer Smurfit Kappa Group (LSE: SKG). The company makes containerboard, corrugated containers, solid board, graphics board and bag-in-box for Europe and the Americas. It seems to me that the stock market is worried about the potential for a cyclical slowdown in the business. But at the end of October, the company said in a trading statement that its key performance measures showed significant and continuing improvement.

Indeed, City analysts following the firm expect ongoing annual advances in revenue and earnings. Yet the valuation languishes on a forward earnings multiple around 7.6 for 2019 and the dividend is yielding about 4.5%. I think the stock is attractive.

Arguably, the best time to pick up shares is when the outlook is a little murky and valuations are compressed. I think we are seeing that situation with these three firms today.

The post 3 promising FTSE 100 names I’d buy for a stocks and shares ISA appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Micro Focus. 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.

That’s why I’m always on the lookout for shares I could buy today and hold until retirement. Today I’m going to take a look at two FTSE 100 income stocks I think could deliver the goods.

A utility with growth prospects?

Utility stocks aren’t known for their growth. Indeed, recent years have seen some utilities struggle with falling profits and dividend cuts.

That’s not yet been the case with my first company, water utility Severn Trent (LSE: SVT). Alongside its regulated water and sewage treatment operations, this group has a growing non-regulated renewable energy business.

The Severn Trent Green Power business now includes anaerobic digestion plants, plus a number of wind turbines and solar sites. These assets aren’t generating much cash just yet. But over the longer term, I believe they could become a useful secondary source of income and growth.

The right time to buy?

Severn Trent’s core water and waste business appears to be performing quite well. Revenue rose by 3.6% to £881.5m during the first half of the year, while underlying operating profit climbed 4.3% to £299.1m. Earnings per share from continuing operations rose by 12% to 68.8p, thanks to a reduction in finance costs.

These figures suggest the group is on track to hit full-year forecasts for earnings of 134.5p per share, with a dividend of 93.1p. These figures put the shares on a forecast price/earnings ratio of 14.6 and a dividend yield of 4.75%.

I’d prefer to buy this stock when the yield is above 5%, to reflect the risks of higher interest rates and political interference. But overall, I think these shares could be a good retirement buy.

A business that won’t go away

One industry I expect to be going strong when I reach retirement age is packaging. One of the biggest players in the paper-based packaging sector is FTSE 100 firm Smurfit Kappa Group (LSE: SKG), which had sales of €8,562m in 2017.

Back in March, Dublin-based Smurfit received a takeover approach from US rival International Paper. The shares rocketed 30% to more than 3,100p, but in the end, the two firms failed to agree a deal. Smurfit’s stock has since fallen steadily and is now worth about 13% less than at the start of 2018.

I think this sell-off may have gone too far. The company’s valuation is starting to look quite tempting to me. One metric I like to use in these situations is earnings yield, which compares a company’s operating profit with its enterprise value (market cap + net debt).

I like earnings yield because it provides an indicator of the returns available to the owner of a company, excluding tax and finance costs. My sums show that at current levels, Smurfit has an earnings yield of 11.5%. That’s well above the 8% minimum I use when screening for potential investments.

Why I’d buy

Analysts expect earnings to rise by 52% to €2.83 per share this year, as organic growth, acquisitions and cost savings all contribute to rising profits.

These numbers put Smurfit Kappa shares on a 2018 forecast price/earnings ratio of 8.8, with a dividend yield of 3.8%. At this level, I’d rate the shares as a retirement buy.

The post Forget the cash ISA! 2 FTSE 100 dividend stocks I’d buy for retirement appeared first on The Twelfth Magpie.

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Roland Head 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.

Smurfit Kappa was not only bashed up by the waves of risk-aversion battering the globe’s shares markets last week. The company plummeted last month amid fears that a raft of extra capacity is about to enter the market, casting some doubt over the firms’ capacity to keep hiking product prices in the years ahead.

Still, at its current share price, Smurfit Kappa for one changes hands on a forward P/E ratio of 10.7 times.  This more than factors in the more problematic supply outlook than we faced a few months ago, and is particularly low given the excellent trading details released last month.

The business declared that underlying revenues had jumped an impressive 7% during the first nine months of 2018, thanks to continued demand growth across most of its markets as well as improving cost recovery. And as a result it said that it expects a “full-year outcome materially better than 2017.”

This more or less matches what City analysts are forecasting, what with an earnings rise of 66% currently being suggested by consensus. Consequently the number crunchers are predicting further dividend growth as well, last year’s reward of 87.6 euro cents per share anticipated to move to 94 cents in the current period and resulting in an inflation-bashing 3.2%. And if realised this would mark the seventh consecutive year of meaty payout increases.

While there may be more material moving into the market than previously expected, the rate at which demand is growing for Smurfit Kappa’s product, allied with the impact of its fizzy acquisition drive — it spent €133m to acquire Serbia’s major packaging players FHB and Avala Ada last month — makes me confident that it can continue delivering strong and sustained profits and dividend growth.

An even bigger dividend yield

Diving market confidence was not the only problem that the BAE Systems (LSE: BA) share price faced last month, the fallout of the suspected murder of journalist Jamal Khashoggi by Saudi Arabian agents also causing some significant investor tension.

While all the facts surrounding the case are to be ascertained, the global condemnation of Riyadh has been loud and has caused some to fear that BAE Systems’ sales to the Saudi kingdom could be pulled by the British government. The sale of Typhoon planes is obviously a huge money spinner for the business, after all, and defence-related spending is only likely to escalate in the years ahead.

I believe there’s little reason to expect arms exports to Saudi Arabia to stop. UK politicians would be fearful of losing not only billions of pounds of lost revenues but also co-operation with a key ally in matters of intelligence. Indeed, the government’s reluctance to pull the plug on weapons sales even in spite of Saudi military action in Yemen underlines how unlikely it is that this latest chapter will halt BAE Systems’ shipments to the Middle East.

Right now the defence giant carries a forward P/E ratio of 12.8 times as well as an inflation-beating 4.2% yield. I expect its share price, like that of Smurfit Kappa, to recover significantly over time, and reckon that both could be considered decent dip buys as of today.

The post Have £3,000 to invest? Here are 2 FTSE 100 dividend stocks I consider bargains after recent heavy selling appeared first on The Twelfth Magpie.

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Royston Wild 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.