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Two FTSE 100 dividend stocks I’d snap up in February

It’s fair to say that volatility has returned to global stock markets. Last week, the FTSE 100 fell significantly on Monday, Thursday, and Friday. This kind of volatility can be uncomfortable. But it can also create attractive opportunities for long-term investors who are willing to look through the short-term noise.

With that in mind, here’s a look at two FTSE 100 dividend stocks I believe are worth snapping up right now.

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Diageo

Diageo (LSE: DGE), which owns a world-class portfolio of spirits brands including Johnnie Walker, Tanqueray, and Smirnoff, is the dividend stock everyone has wanted to own in recent years. As a result, it’s often traded at a high valuation, relative to the average FTSE 100 stock.

Recently though, Diageo has lost a bit of its appeal due to concerns over slowing growth in the emerging markets (related to the trade war and the coronavirus outbreak). This has resulted in its share price pulling back from over 3,600p in early September to a little over 3,000p today – a decline of around 17%.

Personally, I see this pullback as a buying opportunity. Half-year results, issued last Friday, weren’t amazing, but they certainly weren’t terrible. Net sales were up 4.2% and the interim dividend was increased by an inflation-beating 5%. The company also advised it returned £1.1bn to shareholders via share buybacks over the period, which should help push future earnings up (and signals that management sees the shares as attractively valued).

I’ll point out that even after that 17% share price pullback, Diageo shares still aren’t that cheap, compared to some other stocks in the FTSE 100. With analysts forecasting earnings per share of 137.2p for the year ending 30 June, the forward-looking P/E ratio is 21.9. However, given the company’s track record, I believe it deserves a premium to the market. All things considered, I think now is a good time to be building a position in the stock.

DS Smith

Another FTSE 100 dividend stock that’s pulled back recently and I think now looks an attractive long-term buy, is packaging specialist DS Smith (LSE: SMDS). Back in mid-December, its share price was just below 400p. Today, however, the stock is trading near 340p.

I’m bullish on DS Smith for two main reasons. First, there’s the growth of online shopping. With online retail sales expected to soar over the next three years, I expect demand for the company’s corrugated packaging (Amazon delivery-style boxes) to remain robust.

Second, the company has sustainability at the heart of its strategy. As the world becomes increasingly focused on sustainability in the years ahead, I expect companies like DS Smith to prosper.

DS Smith released a solid set of half-year results in early December. For the period, revenue was up 3% and adjusted earnings per share were up 4%. The interim dividend was hiked by 4%. Looking ahead, CEO Miles Roberts said the company is expecting further growth this year, assuming no downturn in economic conditions.

Trading on a P/E of 9.9, and sporting a prospective dividend yield of 4.9%, I believe the stock is a steal right now.

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Edward Sheldon owns shares in Diageo and DS Smith. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended Diageo and DS Smith. 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.