2 FTSE 100 growth and dividend stocks I'd buy in October

Updated: 
paper bags_Mondi

Heading into October, the FTSE 100 index stands at a relatively high level of over 7,300 points. However, that doesn't mean there isn't value to be found within the index at present. Here's a look at two FTSE 100 stocks that I like right now.

Mondi

The way we shop has changed dramatically over the last decade. Whereas once upon a time, consumers would flock to the high street to buy clothes, electronics and furniture, these days we can do it all online. I'm a huge fan of online shopping myself, having ordered a new TV from John Lewis this week in the space of about five minutes.

One effective way of playing this theme, in my opinion, is to focus on companies that specialise in packaging. When you think about it, almost every online purchase requires some form of packaging. I already own shares in packaging specialist DS Smith, which has been an excellent investment for me. However, another company in the sector that I have my eye on is FTSE 100 listed Mondi(LSE: MNDI).

Mondi is probably one of the lesser known businesses in the FTSE 100. The company is an international packaging and paper group (from plastic pouches to paper bags), and employs 25,400 people across 30 countries. The packaging specialist touches millions of lives each day, customising over 100,000 products for its clients.

While revenue growth has been a little stagnant over the last three years, City analysts expect an 8% rise in the top line this year. Earnings of EUR1.53 are currently anticipated, growth of 11% on FY2016, placing the stock on a forward looking P/E ratio of a reasonable 14.9. The company is also forecast to pay a dividend yield of 2.9% this year, with the payout being covered a healthy 2.4 times.

Mondi stated in its August half-year report that "the market outlook remains broadly positive" and that "while we continue to see some inflationary cost pressures, we remain confident of making progress in the year and continuing to deliver industry leading returns."

Putting that all together, Mondi looks to be a good value stock with plenty of long-term potential, in my view.

WPP

Another FTSE 100 stock that I believe offers strong value right now is WPP(LSE: WPP). WPP is the world's largest communications services group, employing over 200,000 people across 113 countries.

Sentiment towards advertising stocks is extremely low right now, and as a result, WPP's share price has declined from 1,900p in March, to 1,370p today. At that price, I'm seeing long-term potential for both capital growth and dividends. The company has an outstanding record of generating shareholder value, and while current conditions may be challenging, I believe WPP's exposure to emerging markets and digital advertising make the long-term story compelling. 

City analysts expect sales to fall around 6% this year, although earnings are expected to rise 9% to 123.1p. That places the stock on an undemanding forward P/E ratio of just 11.1. The company's dividend prospects look attractive too, in my view, as the forward yield is now a high 4.5%. The estimated dividend payout of 61.7p is covered twice by earnings.

Analysts at UBS recently listed the stock as one of their top picks for 2018, with a price target of 1,900p and with that in mind, I believe now could be a good time to get on board.

Picked up The Motley Fool's dividend portfolio report yet? 

If dividend stocks interest you, I'd urge you to read The Motley Fool report Five Shares to Retire On

The report lists five of the Fool's preferred dividend paying companies, and can be downloaded for FREE, with no obligation, simply by clicking here.

Edward Sheldon owns shares in DS Smith and WPP. The Motley Fool UK has recommended 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.