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2 ultra-cheap FTSE 100 dividend stocks you can buy right now

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Everybody loves a bargain, but you have to look beyond the price tag. The following two FTSE 100 growth and dividend stocks are available at single-digit P/E valuations, so are they both buys?

Peak viewing

The longer you write about companies, the more you see how performance goes in cycles. All too often, an upward swing is followed by downturn, and that is the case with ITV (LSE: ITV). Its share price more than doubled in a couple of years to peak at 279p in August 2015, but has since plunged to just 150p. Well done if you sold at the top, hard cheese if not.

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I am wary of buying at share price peaks. But that’s not a problem with ITV, which now trades at just 9.4 times forward earnings, one of the lowest valuations on the FTSE 100. Naturally, there are good reasons for that, as the broadcaster loses eyeballs and advertising to rivals ranging from Netflix to the internet in general. Last year, UK advertisers spent 2.5% less on traditional advertising methods.

Switched on

In February, CEO Carolyn McCall, newly recruited from easyJet, launched a “strategic refresh” after a drop in 2017 profits. But there was some good news, notably a 4% annual rise in total revenues to £3.6bn. The £6bn-company also boasts plenty of winners in its schedule, including The Voice, Five Gold Rings, Broadchurch and Love Island, although McCall could have done without Ant & Dec’s Saturday Night Takeaway troubles.

She seems likely to continue predecessor Adam Crozier’s move to develop the group’s content production, distribution and ownership, to ease reliance on advertising. City analysts reckon earnings per share (EPS) may drop 4% this year, but rise 1% in 2019. However, a further drop in advertising spend cannot be ruled out. A forecast yield of 5.4%, with healthy cover of 1.9, is ITV’s main attraction.

Metal gurus

Investors in mining giant Anglo American (LSE: AAL) have had a far jollier time of late, with the stock up a whopping 150% over two years, as it enjoys the upswing in the commodity cycle. Yet its low forward valuation of just 9.7 times earnings suggests there could be even more growth to come.

Much depends on global and Chinese growth. President Donald Trump’s threats of a trade war knocked confidence, while Premier Li Keqiang is looking to slow credit growth, which could prove a further headwind. No wonder Anglo American has lost some momentum in recent weeks.

Cheap and cheerful

My Foolish colleague Peter Stephens predicts further commodity volatility, but says the sector’s overall prospects are bright, while Anglo American’s cheap valuation gives it a wide margin of safety. The dividend was suspended in 2016 but is now reinstated and expected to yield 4.9% this year, with generous cover of 2.3.

Anglo American recently warned that its EBITDA could fall by up to $400m in 2018, as it inspects its Minas-Rio iron ore pipeline in Brazil for signs of weakness. However, copper, platinum, palladium, iron ore and metallurgical coal production are all rising strongly, a reminder of the benefits of diversification. It still looks like it could be a bargain buy to me.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. 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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