The Motley Fool

Bargain hunters! I’d invest £15k in this FTSE 100 dividend stock going cheap

FTSE 100 blue-chip royalty stocks are going cheap in this market crash.

2020 represents one of the best buying opportunities of a lifetime. When others are fearful, it’s your time to be greedy. I think the canny investor should start nibbling at quality companies with extremely good long-term prospects.

Claim your FREE copy of The Motley Fool’s Bear Market Survival Guide.

Global stock markets may be reeling from the coronavirus, but you don’t have to face this down market alone. Help yourself to a FREE copy of The Motley Fool’s Bear Market Survival Guide and discover the five steps you can take right now to try and bolster your portfolio… including how you can aim to turn today’s market uncertainty to your advantage. Click here to claim your FREE copy now!

That means those with impeccable balance sheets, low debt, hefty cash balances, and a strong competitive advantage.

Blue Mondi

One of these is Mondi (LSE:MNDI). When stock markets were flying ever upwards in early 2020 — what we now know was the tail end of an 11-year bull run — it was far too expensive for new investors to consider.

If we look at those lucky or smart enough to have bought Mondi shares in 2008 when banks were crashing and panic was everywhere, you will see what I mean. The share price rose 1,060% in 10 years, from 191.5p to a peak of 2221.5p.

The Mondi share price is now 24% cheaper than it was at the turn of 2020.

Today’s price-to-earnings ratio is down at just 8.4 with a dividend yield of 5.69%. I call that incredible value for a company that grew its earnings per share by 23% last year. On average, EPS has improved by 12% a year since 2015.

I’m now finding FTSE 100 bargains in companies I never thought I’d be able to buy at good value prices.

What Mondi does

Mondi is a paper and packaging company. You’d be forgiven for not knowing it. It employs nearly 30,000 people and has offices in 30 countries. It’s not a consumer brand and therefore not a household name. It won’t see the same trading volume as Lloyds, 11%-yielding oil major Royal Dutch Shell, or BT.

It manages forests and a vast network of paper mills and manufacturing centres.

In its recent annual report, chief executive Andrew King said the company delivered a “robust and solid operational” performance “against a backdrop of challenging trading conditions“.

This was aided by “strong cost control and a good contribution from acquisitions and capital investment projects“.

Mondi quietly chugs away in the background, never making flashy headlines. But it makes more than a billion euros in profit a year and will be in business long after you and I have retired to our islands in the sun.

How to play it

It’s too early to call the bottom of the market. By 19 March the FTSE 100 was down 35% compared to the start of the year. The overall index could well fall further as UK recession bites.

But for a long-term, buy-and-hold investor that’s not particularly important.

Usually income investors buying stable companies with great long-term prospects can only achieve one of two benefits. They can either get steady dividend yields to reinvest, or rapidly rising share prices. The 2020 stock market crash offers the unique opportunity to get your hands on both.

The opportunities to truly be greedy when others are fearful only come around maybe once every 10 years.

I don’t have £15,000 on hand right now. But then I’m not trying to time the market with one big lump sum. What I do have is £1,250 a month I’m drip-feeding into my preferred bargain FTSE 100 shares. And Mondi will be one of my first purchases.

There’s a ‘double agent’ hiding in the FTSE… we recommend you buy it!

Don’t miss our special stock presentation.

It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about.

They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market.

That’s why they’re referring to it as the FTSE’s ‘double agent’.

Because they believe it’s working both with the market… And against it.

To find out why we think you should add it to your portfolio today…

Click here to read our presentation.

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.