Stock market corrections and crashes provide savvy investors with opportunities to boost their returns. Right now I’m looking for cheap UK stocks to buy to generate a high dividend income, which I can then reinvest for even higher gains.
We have not yet entered the correction or crash phase. However, the losses have been significant and many top-quality stocks were oversold during the panic.
Here are three of my favorite stocks to buy the next time I have money to invest:
|
share |
Forward P/E |
Expected dividend yield |
|---|---|---|
|
Bank of Georgia Group (LSE: BGEO) |
3.5 times |
7.1% |
|
ITV (LSE:ITV) |
9.3 times |
6.5% |
|
HSBC Holdings (LSE: HSBA) |
6.1 times |
9.3% |
As you can see, each of these companies trades at a price-to-earnings ratio (P/E) of less than 10. They also have a huge dividend yield (each well above the 3.6% average for FTSE100 Shares).
If I invested £20,000 evenly in these stocks today, I would receive £1,520 in dividend income this year if the brokers’ predictions prove correct. I am also confident that these companies will also steadily increase their dividends over time.
For this reason I would buy it immediately.
Bank of Georgia
The Bank of Georgia is one of the FTSE250The biggest losses in recent months. The share price fell as political turmoil in Georgia escalated. And more recently, like the entire banking sector, it has fallen as concerns about a possible recession in the US and around the world increased.
However, I think it is worth taking a closer look at current prices. The P/E ratio is one of the lowest of any bank on the London Stock Exchange.
The Bank of Georgia’s long-term prospects currently remain very encouraging. Earnings are rising rapidly (up 23% on an adjusted basis in the first quarter) as Georgia’s booming economy drives demand for financial services. Low product penetration leaves plenty of room for further rapid growth.
ITV
ITV is also very sensitive to economic developments. As a commercial broadcaster, advertising revenues could fall if companies cut their marketing spending. This has been a problem in recent years.
But there is also much to be happy about here. Enormous sums have been invested in his ITVX streaming platform with great success. And there is an opportunity to continue to grow viewership as viewing habits change (monthly active users and digital revenue both grew 17% here in the first half of the year).
ITVX could also experience a boom in a renewed economic downturn if people in financial difficulty Netflix and other paid subscriptions in favor of ITV’s free content.
HSBC
Like Bank of Georgia, HSBC could face a double whammy of weak loan growth and rising impairments if the economy worsens. The bank is particularly vulnerable to the ongoing problems facing China’s economy.
But the FTSE 100 bank, which posted record profits in the first half of the year, appears to be in top form for the long term. Its focus on emerging Asian markets gives it the opportunity to invest in UK stocks such as Lloyds And NatWest.
HSBC is investing heavily in areas such as asset management to capitalise on this opportunity. This is partly due to its strong CET1 capital ratio, which rose to 15% in the first half of the year. A strong balance sheet also helps the company to buy back another 3 billion US dollars of its shares, backing up these excellent dividend forecasts.
The post “3 mega-cheap stocks I’d buy for an instant £1,520 dividend payment!” appeared first on The Motley Fool UK.
Further reading
HSBC Holdings is a promotional partner of The Ascent, a Motley Fool company. Royston Wild does not own any of the stocks mentioned. The Motley Fool UK has recommended HSBC Holdings, ITV and Lloyds Banking Group Plc. The views expressed on companies mentioned in this article are those of the author and may therefore 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.
Motley Fool UK 2024
