Why I'd buy this unloved dividend stock instead of Boohoo.Com plc

So which type of business do you usually prefer: a whizzy internet flyer or a plodding bricks and mortar stalwart? In recent years the smart money has abandoned the high street, but sometimes you have to make an exception.

On your Marks!

Marks & Spencer Group(LSE: MKS) is the plodding bricks and mortar stalwart in question today. The retail sector is going through what CEOs like to describe as "challenging times", and Marks is facing more challenges than most given its high-profile position and the longstanding issues facing its clothing and homeware division.

Latest figures show like-for-like clothing and homeware sales continuing to struggle, with a drop of 1.2% in the 13 weeks to 1 July. That came as no surprise given the troubles afflicting rival Next, but it also continues a depressing long-term trend. Marks has lost its identity and is struggling to get it back.

On yer bike!

Former Halfords chief executive Jill McDonald has been tasked with the job of turning it around, in the newly created role of managing director for clothing, home and beauty. She has a major job on her hands, one that has defeated other talented people, and as people are prone to point out, she has no fashion industry experience either.

Food has been the big winner for Marks, which is doubling down on its success with another 200 new outlets planned by 2019. This should fatten up the bottom line, despite falling like-for-like sales at existing stores. Earnings per share (EPS) growth forecasts from City analysts hardly make inspiring reading, nor do the group's share price performance charts. Ten years ago Marks & Spencer traded at 570p, today's price is 342p. However, years of pain are in the price, with Marks trading at just 11.7 times earnings and offering a forecast yield of 5.6%, reasonably well covered 1.5 times. Now may be a tempting entry point.

Nasty but nice

It pales when compared to online tearaway Boohoo.Com(LSE: BOO), whose share price has grown an incredible 702% over the last two years. The fashion e-commerce leader, whose brands now include acquisitions PrettyLittleThing and Nasty Gal, is still flying after recently doubling total year-on-year revenues to £120.1m.

Its fast-fashion operation has further to go but the question is whether it will rise fast enough to justify today's heady valuation, with the stock now trading at a whopping 113 times earnings and yielding nothing at all (although frankly who cares about the yield in this instance). Barclays recently upgraded its prospects and praised the "competitive advantage in its supply chain and e-commerce-only model that will yield share gains for many years to come". My concern is that every investor pretty much knows this by now.

PrettyLittleGrowthStock

Keeping up this breakneck pace will not be easy, although Boohoo is giving it a good go. EPS are forecast to fall from 97% in 2017 to 36% in 2018 and 22% in 2019. The group should continue to outperform but investors must accept they have probably missed the best of this stock, which may struggle to multi-bag from here. With Marks, the best may still be to come, primarily in the shape of its dividend.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended boohoo.com. 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.

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