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Hunting for bargain shares? I like these 2 FTSE 100 dividend stocks after recent falls

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The stock market has plunged this week, throwing up buying opportunities everywhere you look. These two FTSE 100 stocks have both delivered years of share price growth and dividend income to investors, only to slip lately. They could make tempting buys right now as a result.

Reckitt Benckiser

Household goods giant Reckitt Benckiser Group (LSE: RB) has long been one of my favourite FTSE 100 stocks, thanks to its impressive long-term track record of share price and dividend growth. It sells basic, everyday items that billions of global consumers keep in their kitchens and bathrooms all over the world, and boasts a raft of strong brands.

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Such is its popularity that the Reckitt Benckiser share price usually trades at a premium level of around 24 times earnings, while offering a relatively low yield of just over 2%. Things are different today. Global stock markets have hammered stocks across the board, but Reckitt Benckiser has got into a mess of its own making, too.

On Thursday, it reported a £1.9bn operating loss, as margins weakened due to increased investment in its brands, while management recognised a £5bn impairment charge against its recent Mead Johnson child nutrition acquisition.

This shows that no matter how steady the company is, it can always slip. The coronavirus is adding to the uncertainty, as we wait to see what impact it has on the company’s sales in China and beyond. On the plus side, you can now buy Reckitt Benckiser stock at around 20 times forward earnings, which counts as a bargain by its elevated standards. The forecast yield is 2.8%, but dividend cover is strong at 1.9 and management remains progressive, having just hiked the final payment 2.3%. I would place this high on my watchlist, as global markets tremble.

British American Tobacco

The British American Tobacco (LSE: BATS) share price has underperformed lately, dropping by a third over the last three years. The group has been hit by the continuing crackdown on smoking, particularly since the US regulatory authorities are extending this to new products such as e-cigarettes and vapes, which were supposed to open up a fresh source of revenue.

The £70bn FTSE 100 group still sells a lot of cigarettes, though. Yesterday it reported a 5.7% rise in revenue to £25.9bn, although profit from operations fell 3.2% to around £9bn. Management expects adjusted revenue growth in the 3% to 5% guidance range, despite a 4% drop in overall industry volumes.

British American Tobacco stock is primarily attractive for its dividend, as it currently yields 6.7%, covered 1.5 times by earnings. Today’s entry price of 9.9 times forward earnings is attractive, as recent share price underperformance has pushed it into bargain territory, offering a cushion against further falls in the weeks ahead.

Raising prices and cutting costs should support British American Tobacco despite the long-term decline in smoking. It may even offer some protection against coronavirus concerns, as stocks in more vulnerable sectors such as travel come crashing down. It looks tempting at today’s relative bargain price.

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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.

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