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This small-cap and 7%+ FTSE 100 dividend stock could be unmissable bargains

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Home shopping and education supplier Findel (LSE: FDL) is up a modest 1.23% at time of writing after reporting a 4.8% rise in group revenue to £479m and adjusted operating profit up 15.4% to £36m.

Retailer therapy

Management heralded a year of growth and strategic progress” in the 12 months to 30 March and the response would probably have been more enthusiastic, if investors had not already been primed to hear some good news today. In April, the group announced that its full-year performance would be “at the upper end of market expectations”, thanks to strong growth in customer numbers. 

Findel’s Express Gifts division, which provides a personal shopping service to around 1.8m active customers through direct marketing and its Studio.co.uk and Ace.co.uk websites, reported strong revenue growth of 9.6% to £285m, with clothing sales particularly strong, up 14.2%.

Back to school

The group has transformed online sales and cut base costs at its Findel Education division, which provides resources to nurseries, schools and other educational establishments. It has cut prices across 800 best-selling products for customers who switch to online ordering. Revenues dropped 6.2%, partly as a result, although customer numbers did grow 5%.

This £212m company recently appointed Phil Maudsley its chief executive and he’s turning it round after the group issued two profit warnings in two years. Past problems continue to weigh on its valuation, which is a tempting 8.6 times earnings. However, City analysts are sceptical, forecasting a 5% drop in earnings per share (EPS) in the year to 31 March 2019, then another 3% drop the year after. Its share price may be up 18% in the past year but retail is a risky sector. Findel’s price is right, but its future could be patchy.

Imperial power

As far as bargains are concerned, I think this one looks a little more addictive. Tobacco manufacturer Imperial Brands (LSE: IMB) currently trades on a cut-price forward valuation of just 10.2 times earnings after a tough year that has seen its share price drop 26.3%.

This is a tough sector to invest in as the number of smokers continues to fall in the developed world. That’s a trend I think will spread across emerging markets as better off, better educated consumers place a greater priority on their health.

Dividend winner

However, the market is not going to collapse overnight, and one major benefit of the Imperial Brands share price crash is that it now offers a whopping forecast yield of 7.2%, covered 1.4 times. It’s now the 11th cheapest stock on the FTSE 100, as measured by its P/E, while offering the fifth highest dividend yield. Better still, as my Foolish colleague Alan Oscroft points out, it has now posted nine consecutive years of 10% dividend growth.

Yes, tobacco sales volumes and net revenue fell 2% at constant currencies in the six months to 31 March, but these were within expectations. It plans to cut £100m worth of costs this year and is making progress in the nascent vaping market (I see more vapers every day). Forecast EPS growth is negligible, but I still feel the yield and valuation are too tempting to ignore.

Buy-And-Hold Investing

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harveyj has no position in any of the shares mentioned. 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.