2 cheap dividend shares I’d buy in March for 6%+ yields

Part of my investing routine at the beginning of each month is to set aside time to look for new dividend stocks to buy. I’ve been looking for it FTSE 100 and settled in some of the income stocks that offer index-beating payouts.

The two companies are Abrdn (LSE:ABDN) and Aviva (LSE: AV.), which have dividend yields of 6.4% and 6.6% respectively.

Let’s explore the insights for each one.

Abrdn

The change in the Abrdn share price for the last period is +16%. This Footsie company provides a wide range of investment services and derives the majority of its revenue from the UK.

First, it is important to acknowledge that investment managers faced difficulties last year. The company’s 2022 performance was somewhat disappointing. Net operating income fell 4% to £1.5bn and underlying profit fell almost five-fold at £263m.

However, in my view, volatile market conditions are responsible for these figures and there is reason to be optimistic about the company’s prospects in 2023.

Last year, the business acquired Interactive Investor (ii). This enhances Abrdn’s direct-to-consumer offering in UK savings and wealth. Indeed, growth ii looks promising.

Additionally, I am pleased that the company has maintained its annual dividend at 14.6p per share, which suggests Abrdn is keen to maintain its reputation as one of the UK’s top dividend stocks.

That being said, dividend coverage is not as strong as I would have liked, but I expect stocks to benefit from easier trading conditions once the macroeconomic picture starts to improve. In addition, it should be noted that increasing value for shareholders through share buybacks remains a top priority.

Overall, if I had some spare cash, I would buy Abrdn shares as the company continues to streamline its business and strengthen its customer base.

Aviva

In contrast to Abrdn, Aviva’s share price has fallen by 16% in 12 months. The multiline insurer focuses on the UK, Irish, and Canadian markets.

Aviva looks like another solid dividend stock in my opinion. The company expects to pay out 32.5p per share this year. What’s more, the business also expects to launch a new share buyback program to accompany next year’s full results next week.

The rapid growth in Aviva’s growing annuity business is encouraging. It also positions the company as one of the UK’s largest providers of equity releases. Both of these features mean businesses are well placed to benefit from increased demand for retirement funding solutions. In this context, the changing demographics of an aging population is a long-term tailwind for Aviva shares.

Investing in insurance giants is not risk free. Like most life insurers, Aviva has a large liability on its balance sheet. As the defined benefit pension scheme faces margin calls on its liability-driven investment (LDI) strategy following last year’s ‘mini’ budget, the group’s capital and liquidity are being tested. Future turbulence in the bond market could cause further shocks.

However, Aviva is a well capitalized business. This shows excellent resilience in the face of market turbulence. With multiple income streams and market-leading distributions, this is another FTSE 100 dividend share I’d buy in March with cash.