There are loads of great FTSE 100 dividend stocks going cheap today, but I keep returning to the same ones.
I’ve spent the summer loading up on wealth manager M&G, insurer and asset manager Legal & General Group and housebuilder Taylor Wimpey, which all yield around 9%. It’s time to cast my net wider. Here are three top value dividend stocks I’ve overlooked but am considering now.
WPP (LSE: WPP) has been in turmoil since powerhouse Martin Sorrell was forced to quit over misconduct charges in 2018, after decades at the firm he helped found.
I’ve been overlooking these
As the world’s largest advertising firm, WPP has been on the front line of recent economic and stock market volatility, plus it had to undergo a huge overhaul at the same. The share price is down 17.88% over five years and 9.57% over 12 months. I think that offers me an opportunity.
WPP now looks good value, trading at 11.64 times earnings. It has a forecast yield of 5.4%, covered 2.4 times by earnings. Operating margins are forecast to rise from 9.4% to a healthier 13.3%. Yet it faces challenges too.
On 26 October it was forced to cut full-year guidance as technology clients cut ad spend, with Q3 revenues falling 5% to £2.84m. WPP should do better when brighter days arrive. I’d consider buying before then, to take advantage of today’s relatively high yield and low valuation.
Meanwhile, in its former incarnation as GlaxoSmithKline, pharmaceutical stock GSK (LSE: GSK) was on my buy list for years. Then the dividend per share got stuck at 80p as CEO Emma Walmsley prioritised investing in R&D to boost its depleted drugs pipeline, and my attention wandered.
A recovery is due
This fallen dividend hero has stripped out consumer division Haleon but is still struggling to achieve lift-off. Its share price is down 2.88% over 12 months. The dividend is on the up though, with a forecast yield of 4.1%, covered 2.6 times by earnings.
In contrast to WPP, GSK enjoyed a positive Q3 with total sales up 10% to £8.15bn as the vaccines segment surged 33%, with total operating profit rocketing 64%. Today could be a good time to hop on board while GSK is still cheap, trading at 10.1 times earnings. It’s back on my buy list.
Finally, here’s a stock I actually have bought lately, but have been trying not to think about too much in case I’m overcome by the urge to sell. I snapped up Dublin-based paper and packaging specialist Smurfit Kappa Group (LSE: SKG) in June as it looked great value and offered a healthy yield and growth prospects.
Food for thought
On 12 September, its shares crashed 10% on news it was combining with US peer WestRock and seeking a New York listing alongside its standard London one. Markets reckon Smurfit overpaid in its desperation to seal the deal. Having absorbed that initial shock, investors are returning. Its shares are up 4.85% in the last week but down 5.91% over one year.
I’m still in the red but holding on in the expectation that the deal will allow Smurfit to access US growtn opportunities. It looks good value trading at 7.32 times earnings and yields 4.31%. I might even consider buying more.
