Hunting for income? Here are 2 cheap shares with yields above 6%

Jon Smith talks through two cheap shares that have faced some struggles but could be good long-term sources of dividend payments.

| 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.

Asian man looking concerned while studying paperwork at his desk in an office

Image source: Getty Images

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.

sdf

Being an income hunter might sound rather aggressive, but in reality it’s something a lot of us need to do. Keeping an eye out for lucrative stocks with above-average dividend yields can ensure that an investor gets the most bang for their buck. With that in mind, here are two cheap shares with generous yields.

Switched on

The first one is ITV (LSE:ITV). I refer to the stock as being cheap given that it’s down 45% over the past two years, and broadly flat over the past year.

The business might not be the hottest growth stock around, but it certainly isn’t heading towards bankruptcy. Operating profit for last year was £519m, which was the same as for 2021. Earnings per share did tick slightly higher from 9.4p in 2021 to 10.7p in 2022, which allowed a final dividend of 3.3p to be confirmed. This means the current dividend yield is 7.1%.

Should you invest £1,000 in Currys Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Currys Plc made the list?

See the 6 stocks

Part of what’s helping to keep ITV running is the Studios division. This is the part of the firm that produces own content, including Love Island, Line of Duty and The Voice. Growth is coming not just from the UK, but in pushing shows abroad, such as in the US (where revenue grew by 26% year on year).

Granted, the business is still very dependent on advertising revenue. Total ad revenue fell by 1% last year, and I feel this is the main risk to the company going forward. Yet with the continued growth in Studios and streaming, I believe this shortfall can be made up.

Rising yield

Another name worthy of consideration is Currys (LSE:CURY). The stock is currently trading at 52-week lows, just above 50p. This marks a fall of 36% over the past year.

The drop has helped to push up the dividend yield to 6.3%, well above the FTSE 250 average. In terms of problems, the company has struggled recently with performance in the Nordics. It spoke of how competitors have been heavily discounting stock, which is putting pressure on margins. As a result, it downgraded profitability in its most recent outlook.

A further headache came last month when it emerged that European competition regulators are investigating the Nordic subsidiaries.

I see these as short-term problems, however. The discounts on the stock should finish, especially as consumer demand picks up. Further, revenue generated from the Nordics isn’t as large as the UK & Ireland division. Therefore, the scope for this to blow up into a huge problem is somewhat contained.

Aside from a brief period during the pandemic, Currys has been a consistent dividend payer over the past decade. With the share price dip in recent months, I believe this makes it an attractive purchase to benefit from future income by locking in current levels.

Created with Highcharts 11.4.3Currys Plc + ITV PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk


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.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. 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.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Dividend Shares

Portrait of pensive bearded senior looking on screen of laptop sitting at table with coffee cup.
Investing Articles

A terrific 6% yield but a P/E of 225! What’s going on with BP shares?

Harvey Jones owns BP shares but sometimes wishes he doesn't. Could the FTSE 100 oil giant take him by surprise…

Read more »

National Grid engineers at a substation
Investing Articles

Does the National Grid share price really matter for an income-focussed investor?

In many investors' opinion, its dividend is key to the investment case for National Grid. Our writer reckons the share…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

2 FTSE 100 dividend stocks to consider for passive income growth that crushes the market!

Discover a pair of FTSE 100 dividend stocks that are tipped to outperform the UK stock market in 2025 --…

Read more »

Road 2025 to 2032 new year direction concept
Investing Articles

What investors need to save in an ISA to target a passive income of £1,500 a month

Harvey Jones investigates how investors can build a long-term passive income through the power of compounding, tax-free inside a Stocks…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

Is the runaway Lloyds share price about to hit a nasty bump?

Harvey Jones has been thrilled by the performance of the Lloyds share price since he bought the stock two years…

Read more »

Lady wearing a head scarf looks over pages on company financials
Investing Articles

Investors could get a second chance at this top passive income stock

Having missed an opportunity to earn 9% a year in passive income by buying Admiral shares, Stephen Wright is on…

Read more »

DIVIDEND YIELD text written on a notebook with chart
Investing Articles

2 dividend shares to consider for a 5-star ISA!

Looking for ways to turbocharge the size of your investment portfolio? These hot dividend shares are worth serious consideration.

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

Spare £5k? Here’s how long it would take to generate a second income of £5k every year!

Christopher Ruane explains the maths behind building a second income from dividend shares, as well as some of the opportunities…

Read more »