Investors have STILL been selling these FTSE 100 dividend stocks. Are they crazy?

These two FTSE 100 (INDEXFTSE: UKX) income shares are great dip buys right now, argues Royston Wild.

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Plumbing and heating play Ferguson (LSE: FERG) has been one of the FTSE 100’s biggest sufferers so far in October, its market value shrinking by a throbbing 21% in the month to date.

This is baffling to me. Sure, fears of a severe slowdown in the US economy as the Federal Reserve continues its interest rate-raising programme are understandable, the North American marketplace being Ferguson’s biggest market by some distance. Such a sizeable sell-off of its shares is frankly ridiculous in my opinion, though, and particularly given the pace at which business is swelling Stateside as it grabs market share.

Indeed, at the top of the month the Footsie firm advised that revenues boomed 11.3% in the 12 months to July, with organic sales having improved 9.9% year-on-year. And Ferguson sees nothing but further progress given that it is currently opening in “good US residential and commercial markets and [a] strong industrial market.”

Ferguson hiked the ordinary dividend 21% in the last fiscal period to 189.3 US cents per share and City analysts are expecting further expansion in the current year. A 201.5 cent payout is predicted, supported by a forecast 16% earnings rise, and yielding an inflation-beating 3%.

Thanks to its positive profits outlook Ferguson is in great shape to keep raising dividends at a fair lick too. And with it also dealing on a low, low forward earnings multiple of 12.9 times I reckon it’s a great stock to pick up today.

Finally bottomed out?

Okay, the severe share price weakness that has enveloped WPP (LSE: WPP) over the October period can be considered more excusable in my book considering that it released another pretty poor update in the month.

But those investors shifting out of the business recently really are selling out close to the bottom, in my opinion. Sure, City brokers may now be expecting WPP to record a 32% earnings slide in 2018, though this still leaves it dealing on a forward P/E ratio of just 8 times.

At these levels I think the Footsie firm could attract fresh waves of buying. That’s not to say there isn’t the risk that earnings could disappoint for a little longer, but recent updates from its peers like Publicis — which advised that net revenues rose 1.4% during July-September — suggests that tough conditions in the global ad market are finally beginning to turn.

There’s clearly a lot of surgery that WPP has to undergo to remove the dead wood and get it firing again in an increasingly-digitised world. But there’s still plenty to celebrate, like its increasing emphasis on emerging markets, and I reckon it will have what it takes to rebound and to do so strongly, probably from the start of the next decade.

In the meantime investors can console themselves with City projections of a 60p per share dividend, a reading that yields a jaw-dropping 6.9%. I would view the 22% share price drop since the start of the month as a fresh opportunity for savvy dip buyers to grab a blue-chip beauty.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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.

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