As a veteran value, income and dividend investor, I’m always looking for new stocks to buy. Ideally, I’m seeking modestly priced shares that pay market-beating cash dividends. Happily, there’s no shortage of such shares in the blue-chip FTSE 100 index.
Two stocks I own for juicy dividends
Despite rising over 6% so far in 2023, the FTSE 100 still looks good value to me. Here are two Footsie stocks I bought in 2022 to add more dividends to my family portfolio.
Legal & General
Legal & General Group (LSE: LGEN) is a leading UK provider of life assurance, savings and investments. The group has over 10m customers and manages over £1.3trn in assets.
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Having previously worked in this industry for many years, I’ve long been an admirer of this well-known brand. And L&G shares don’t look at all expensive to me right now. Here are their fundamentals:
| Current price | 261.3p |
| 52-week high | 295.7p |
| 52-week low | 201.4p |
| One-year change | -10.3% |
| Market value | £15.6bn |
| Price/earnings ratio | 7.7 |
| Earnings yield | 13.0% |
| Dividend yield | 7.2% |
| Dividend cover | 1.8 |
Despite being well above their 52-week low, L&G shares are down over a tenth in 12 months. Yet they trade on an earnings yield of 13% — almost twice that of the wider FTSE 100. In addition, their dividend yield of 7.2% a year looks rock-solid, being covered over 1.8 times by earnings. And L&G didn’t even cut these cash payouts during 2020’s Covid-19 crisis.
Then again, L&G’s future earnings, cash flow and dividends are very much geared towards financial asset values. If markets take another plunge, then L&G’s share price could suffer. Even so, I would gladly buy this cheap stock today — if I didn’t already own it, that is.
Vodafone
Like L&G, Vodafone Group (LSE: VOD) is a household name here in the UK. Also, it operates in more than 30 other countries worldwide, including Germany, Italy, Spain and South Africa. Worldwide, it has over 300m mobile customers and 27m fixed-broadband customers.
In Europe, Vodafone is the largest mobile and fixed network operator. Yet despite this market strength, Vodafone’s share price has been in decline for years. It has more than halved (-53.7%) over the past five years and hit a 52-week low in December.
Then again, following sustained price falls, the shares now offer a market-thrashing dividend yield. Here are their fundamentals:
| Current price | 91.14p |
| 52-week high | 141.6p |
| 52-week low | 83.24p |
| One-year change | -31.8% |
| Market value | £24.9bn |
| Price/earnings ratio | 14.0 |
| Earnings yield | 7.1% |
| Dividend yield | 8.5% |
| Dividend cover | 0.8 |
While the shares trade on a similar earnings yield to the FTSE 100 (around 7%), they offer a very generous dividend yield. Alas, this cash yield of 8.5% a year isn’t fully covered by trailing earnings. In fact, only 84% of this payout is currently covered. In short, it could be at risk until the group’s results improve.
Despite concerns over Vodafone’s dividend, my wife bought this stock in early December at 90.2p per share. We bought on hopes that upcoming price rises in 2023 will help to boost group earnings. For me, the stock has fallen too far since 2021 and is ripe for a rebound. Hence, we will sit back and collect our dividends while we wait for the share price to recover!
