2 cheap FTSE 100 stocks with high dividend yields I’d buy in this market crash

These two FTSE 100 (INDEXFTSE:UKX) dividend shares could offer high long-term returns in my opinion.

| 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.

sdf

Buying dividend shares today may not seem to be a sound idea after the FTSE 100’s recent fall. The ongoing spread of coronavirus may mean that trading conditions worsen, and stock prices continue to decline in the short run.

However, buying undervalued shares with high yields today may boost your long-term financial prospects. They have recovery potential in many cases, and may prove to be attractively priced following their recent declines.

Here are two FTSE 100 stocks with high yields that may offer long-term recovery potential. Buying them now could prove to be a profitable move.

Should you invest £1,000 in Barclays 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 Barclays made the list?

See the 6 stocks

ITV

The recent full-year results from ITV (LSE: ITV) highlighted the challenging trading conditions it has faced. Revenue increased by just 3%, while its advertising revenue was 1.5% lower than the previous year. Adjusted net profit moved 10% lower, and this trend could continue in the near term as business and consumer confidence in the UK remain weak.

Despite working hard to become more efficient, expand into new markets and invest in its digital growth, ITV is finding it tough to post meaningful top and bottom-line growth. This trend may continue, since the spread of coronavirus is likely to lead to a slowdown in the UK’s economic growth rate. And with Brexit now a matter of months away, the prospects for the business are challenging.

However, this seems to have been priced-in by investors. The stock now has a price-to-earnings (P/E) ratio of just 6.7, while its dividend yield stands at 9.1%. Both of these figures suggest that the company’s shares offer excellent value for money. While things may get worse before they improve for ITV, its long-term investment appeal seems to be high.

BAE Systems

Over the past three weeks, the share price of BAE (LSE: BA) has fallen by around 22%. As a result, the aerospace and defence company now has a dividend yield of 4.6%. Although there are numerous companies in the FTSE 100 with higher yields at the present time, the income growth potential of BAE seems to be relatively high.

It recently made acquisitions that strengthen its growth potential within the defence industry. It may also benefit from rising defence spending over the coming years, while its recent results highlighted the impact of its reorganisation on profitability.

Looking ahead, the stock is expected to post a rise in its bottom line of 7% in the next financial year. Clearly, this figure is likely to change between now and then depending on the impact of coronavirus on the world economy. But with BAE having a P/E ratio of just 10.8, it seems to offer good value for money and recovery potential over the long run. As such, now could prove to be a logical time to buy and hold it for 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.

Peter Stephens owns shares of BAE Systems. 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.

More on Investing Articles

Branch of NatWest bank
Investing Articles

Here’s what a £10,000 investment in NatWest shares 5 years ago is now worth

NatWest's been one of the FTSE 100’s best-performing shares over the last five years. Stephen Wright looks at what's behind…

Read more »

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

Beware! Traders are betting these UK shares will fall

It's always worth keeping an eye on which UK shares are popular with short sellers. Paul Summers highlights the top…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

See how much ISA investors need to aim for to achieve a £3,000 monthly second income

Harvey Jones shows how it's possible to build a second income totalling £36,000 a year, from a portfolio of FTSE…

Read more »

Young woman holding up three fingers
Investing Articles

Just released: our 3 top income-focused stocks to consider buying in August [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

BHP shares rise on strong trading update! Is it time to buy in?

BHP shares are up thanks to a strong operational update in tough conditions. Discover why I believe they could continue…

Read more »

Chalkboard representation of risk versus reward on a pair of scales
US Stock

Why the next two weeks will be huge for the Nvidia share price

Jon Smith flags up both the upcoming earnings and headline risk regarding Chinese exports as volatility events for the Nvidia…

Read more »

UK supporters with flag
Investing Articles

These soaring UK shares are smashing the S&P 500

Mark Hartley identifies two UK shares that are giving the US market a run for its money. But are they…

Read more »

Google office headquarters
Investing Articles

Looking for stocks to buy? Here are 3 shares the pros have been snapping up

There are many different ways to identify stocks to buy. One strategy that Edward Sheldon finds very effective is to…

Read more »