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These FTSE 100 dividend stocks are on sale! Can you afford to miss out?

Royston Wild
Stack of new bank notes

Kingfisher (LSE: KGF) is one of those FTSE 100 stocks that remains caught in a heavy tailspin. Its share price has dropped around 20% in just six months and in recent days fell to its cheapest for a decade, below 200p.

The Footsie’s recent plunge to seven-month lows has left plenty of shares looking criminally undervalued today. Kingfisher, though, is a blue-chip I wouldn’t touch with a bargepole. A current forward P/E ratio of 8.9 times may put the B&Q owner in bargain-basement territory, but its cheap rating reflects tough conditions in France and the British Isles, and the threat of things getting worse as the economic landscape on both sides of the Channel deteriorates.

The DIY colossus put in a mixed set of quarterlies in May, when news of a 3.4% improvement in UK and Irish like-for-like sales was more or less wiped out by a 3.7% drop in France. It doesn’t take a genius to realise that interims scheduled for 18 September will likely be even worse as the UK retail sector dives to multi-decade troughs.

It’s also likely new evidence will emerge of additional trading pressures created by its botched ‘ONE Kingfisher’ restructuring programme too, an extra headache which the company’s failed to get a proper grip on. So forget about that low rating and Kingfisher’s bulging 5.6% forward dividend yield, I say. This is a share you should avoid like the plague given the prospect of extra share price weakness in the weeks ahead.

A true dividend hero

I think you’d be much better off using that cash to buy RSA Insurance Group (LSE: RSA). This particular share’s dropped a fifth in value in little over a month as fears concerning the global economy have worsened. I would argue, though, that the market is underestimating the insurance giant’s long-term profits outlook.

Interims released at the start of the month showed pre-tax profit fell around a quarter in the six months to June, to £227m, though this was a reflection of one-off exit charges. In fact RSA’s release provided plenty to celebrate, with underwriting results coming in at their best for a decade, thanks to particularly-strong growth among its most profitable businesses. Its core Personal Lines division reported a terrific combined ratio of 89.9% (excluding exits) for the first half to give you just a taster.

Now RSA’s expected to report a 23% earnings explosion for 2019 and there’s plenty of reasons to expect sales to keep ripping higher as the company’s transformation scheme clicks through the gears. At current prices, the insurer boasts a forward P/E ratio of 12.8 times. This is a bargain in my book, considering its fast-improving growth outlook.

One final thing. Expectations of brilliant profits growth mean dividends are predicted to keep surging too. And this means investors can enjoy an inflation-smashing yield of 4.7%. If you’re looking to buy some blue-chip bargains today, then RSA’s worth some serious attention, though it’s not the only underpriced income hero out there that could make you rich.

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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.

Motley Fool UK 2019