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There are quite a lot of cheap-looking shares even within the prime flight of the UK inventory market proper now. Not solely that, however a few of them have a sexy dividend yield in addition.
Whereas the typical FTSE 100 yield is at the moment round 3.6%, the trio of UK shares I’ve highlighted for traders to contemplate every affords a yield of 6.6% or increased.
British American Tobacco
For starters, there’s a enterprise sector that’s perennially fashionable with dividend lovers: tobacco.
British American Tobacco (LSE: BATS) is the drive behind plenty of well-known manufacturers globally, akin to Fortunate Strike and Rothmans.
Tobacco is huge enterprise, however not with out its challenges. The well being dangers are well-known, and fewer and fewer persons are taking on smoking cigarettes.
Nonetheless, whereas declining cigarette gross sales pose a severe danger to revenues and income for British American, it’s scrambling to develop non-cigarette gross sales. Its premium model portfolio and distribution community might assist it there.
Cigarette gross sales additionally stay substantial, with the agency shifting near 10bn cigarettes every week on common. This UK share has raised its dividend yearly for many years and at the moment yields 7.7%.
Authorized & Common
The dividend-raising monitor report of fellow FTSE 100 share Authorized & Common (LSE: LGEN) is much less constant.
It held its dividend per share flat one 12 months throughout the pandemic and reduce it after the 2008 monetary disaster. Its present objective is to develop the dividend per share yearly by 2%. The yield is already a tasty 8.8%.
Is such a excessive yield a purple flag?
Possibly. Authorized & Common has been a weak performer in some methods. Certain, its share value is up 32% in 5 years, which sounds spectacular. However that’s beneath blue-chip UK shares general: the FTSE 100 index has risen 49% throughout that timeframe.
Plans to promote an enormous US enterprise might assist help the dividend for now, however danger decrease income in future.
Nonetheless, I like the corporate’s strategic give attention to retirement-linked monetary providers, its confirmed enterprise mannequin, robust model, and huge buyer base.
WPP
One UK share I lately bought for my very own portfolio after a share value crash is advert community big WPP (LSE: WPP).
The share value has leapt by a fifth in little over a month, however remains to be down by a 3rd since mid-December.
At that value, the yield is 6.6%. The corporate has held its dividend per share flat since slicing it throughout the pandemic.
That doesn’t appear to be an indication of confidence and certainly WPP faces a number of dangers, with an financial downturn and AI each threatening demand for a few of its providers.
Nonetheless, whereas promoting is evolving, it isn’t going away. WPP’s massive company of networks, deep experience, and huge consumer roster all stand it in good stead to grab future alternatives, I reckon.
That could possibly be good totally free money flows and assist hold the dividends coming.
