I see these FTSE 100 dividend stocks as ‘screaming’ buys right now

The FTSE 100 (INDEXFTSE: UKX) crash is throwing up some amazing buying opportunities, says Edward Sheldon.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Due to the high level of economic uncertainty associated with the coronavirus outbreak, the FTSE 100 has tanked in recent weeks. As I write, the index is at 5,560 points, a long way below the 7,500 level it was trading in February.

In my view, this crash has thrown up a number of compelling investment opportunities. Here’s a look at three FTSE 100 dividend stocks I believe are screaming buys right now.

Legal & General

The first opportunity is Legal & General Group (LSE: LGEN). Its share price has fallen from around 320p in mid-February to just 203p today. That’s left the stock trading on a forward-looking P/E ratio of just six and sporting a prospective dividend yield of 9%. Those metrics look very attractive to me.

LGEN’s recent full-year results were very good. Operating profit from continuing operations rose 17%, while earnings per share climbed 16%. Meanwhile, the company increased its dividend by 7% – its 10th consecutive increase. The company said it remains confident in its ability to deliver future growth. CFO Jeff Davies also stated that the group has “very little” exposure to the coronavirus.

With LGEN shares now trading at a rock-bottom valuation and offering a huge yield, I think now is a great time to be buying. 

Schroders

Another FTSE 100 stock that’s been beaten up recently and now appears to offer considerable value is investment manager Schroders (LSE: SDRC). I particularly like the non-voting shares, as they’ve a higher yield than the voting shares.

In mid-February, SDRC shares were changing hands for 2,600p. Now, however, you can pick them up for around 1,830p. At that price, the forward-looking P/E ratio is just nine and the prospective yield on offer is 6.3%.

Schroders recently issued a rather underwhelming set of full-year results. For the year, profit before tax fell 4%, while basic earnings per share before exceptional items declined 7%.

Looking ahead though, I believe the firm has the potential to deliver long-term growth. Not only has the group recently made structural changes to increase its focus on wealth management, but it has also recently made a key acquisition in the impact investing space. Additionally, the group should benefit as global stock markets rise in the long run.

With the shares down significantly over the last few weeks, I believe now’s a great time to snap up a slice of this high-quality business.

Sage

Finally, I really like the look of accounting solutions specialist Sage (LSE: SGE) right now. Its shares were trading near 800p in February. Now they can be picked up for around 595p. At that price, the forward-looking P/E ratio is about 20 and the prospective yield on offer is around 2.9%.

For a company of Sage’s quality (the group is highly profitable, has a strong balance sheet, and has a strong competitive advantage), I think that valuation and dividend yield is a steal.

Sage should be relatively well insulated from the impact of the coronavirus. While businesses may cancel their employees’ travel plans as a result of the outbreak, they’re unlikely to cancel their accounting systems.

Interestingly, CEO Steve Hare bought 5,000 Sage shares last Friday, which suggests he expects the stock to rebound. This leads me to believe that buying the shares now, while the market is down, could be a rewarding move in the long run.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon owns shares in Sage, Schroders (non-voting), and Legal & General. The Motley Fool UK has recommended Sage Group and Schroders (Non-Voting). 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.

More on Investing Articles

Investing For Beginners

Up 31% in a month, could this FTSE 250 stock be getting bought out?

Jon Smith takes a look at speculation that's pushing the share price of a FTSE 250 share higher and considers…

Read more »

Investing Articles

Here’s how I’d follow Warren Buffett to start building passive income in 2025

Ben McPoland highlights one FTSE 250 firm with a strong competitive edge that he thinks can continue rewarding investors with…

Read more »

Investing Articles

Burberry shares: undervalued FTSE gems that are ready to rocket?

Burberry shares soared at the beginning of the week as the takeover rumour mill went into overdrive. Is Paul Summers…

Read more »

US Stock

Here are the latest share price forecasts for S&P 500 giant Amazon

Amazon has generated monster gains for investors over the last decade. And Wall Street analysts believe the S&P 500 stock…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

2 high-yield FTSE 250 shares I’d buy today — and 1 that I’d avoid

UK markets have felt some volatility after last week’s Budget and the FTSE 250 was no stranger to it. Our…

Read more »

Investing Articles

3 reasons the Rolls-Royce share price could soar over the next decade

Sustainable aviation fuel, narrow-body aircraft, and small nuclear reactors could all keep the Rolls-Royce share price climbing over the next…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

Here’s how much income I’d get if I invested my entire £20k ISA in cheap BT shares

BT shares are on the up but still cheap, while the FTSE 100 telecoms stock offers a good yield too.…

Read more »

Investing Articles

2 FTSE dividend shares yielding more than 6% with P/Es of less than 9!

Harvey Jones picks out two brilliant FTSE 100 dividend shares that yield more than 6% but are selling at strangely…

Read more »