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A FTSE 100 dividend stock I’d buy for my ISA before February and hold forever!

Smurfit Kappa Group (LSE: SKG) had a spectacular share price run in the latter part of 2019. Up 20% in the three months to December, values have settled back more recently as investors have booked profits.

There’s good reason to expect the packaging manufacturer to get on the front foot sooner rather than later, though. Firstly, despite those gains at the back end of last year, it still looks dirt cheap on paper. A forward price-to-earnings (or P/E) ratio of 12.2 times sits comfortably below the FTSE 100’s corresponding average of 14.8 times.

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And secondly, on February 5, full-year results will be unleashed. And I’m predicting another bright set of numbers.

Great profits growth

Smurfit Kappa certainly impressed when it updated the market in mid-autumn. It advised that it had delivered a “a strong performance” in the nine months to September. It said that EBITDA was up 11% from the same 2018 period, at €1.26bn, while its key metrics had either performed in line with, or exceeded, prior expectations.

Revenue was up 3%, it said, at €6.85bn, with organic revenues rising around 2% in both Europe and The Americas. Meanwhile EBITDA margins grew by an encouraging 140 basis points year-on-year to 18.3%.

The Footsie firm is the largest corrugated packaging producer in Western Europe and in great shape to deliver solid volume growth in 2020 and beyond. And its mighty balance sheet also gives it plenty of scope for consolidation in a highly-fragmented market to generate long-term profits growth.

In the first six months alone it spent €190m on acquisitions. Action in Serbia and Bulgaria in the period improved its presence in the fast-growing emerging regions of South East Europe. It also increased its stake in box-maker Cartón de Colombia to capitalise more effectively on striking growth rates here (volumes in the South American country leapt 9% in the first six months of 2019).

Growth, income AND value!

Smurfit Kappa has a third trick up its sleeve too: surging demand for recyclable products. It says that “consumers are increasingly demanding sustainable packaging solutions” and has described it as a “mega trend.” The heavy investment it has made to improve the recyclability and biodegradability of its products stand it in good stead to ride booming demand for greener goods. The fact that 100% of its raw materials are from sustainable and/or certified sources should also drive business.

City analysts expect group earnings to dip 6% in 2020 as cost headwinds intensify. But the bottom line is expected to rebound in 2021, a meaty 8% rise currently anticipated. What’s more, Smurfit Kappa’s bright long-term outlook means that annual dividends are expected to keep growing too. This means chubby yields of 4% and 4.1% for this year and next respectively.

If you’re looking for growth, income and value on the FTSE 100, I reckon Smurfit Kappa is a top stock to buy today and hold for years to come.

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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.