[ad_1]
Image source: Getty Images
It looks like it FTSE 100 it could be in for a record dividend payment in 2023, with estimates showing a total of £85.8bn. Which makes me think it’s a good time to buy dividend stocks.
I see many undervalued stocks out there, offering high dividend yields. Both of these, in particular, appear to be at a low traditional price-to-earnings (P/E) ratio.
dirty
Speaking of dirt cheap, my first choice of dirt cheap. Well, dirt is valuable, in the form of metals and minerals. The mining and commodity business is out of favor right now, and that’s what I’m focusing on today Glencore (LSE: GLEN) specifically.
We’re looking at a predicted dividend yield of 7% here. That, alone, makes the stock look attractive to me. But what about the price?
The forecast puts Glencore shares at a forward P/E of just six. The rest is the same, which will be a super cheap price. Of course, other things are rarely the same. And stocks are often at low prices when prospects are troubled.
Income
Glencore’s earnings are expected to decline over the next few years, so a lower P/E may apply. But dips will lift the P/E by only around seven or so, still around half the FTSE 100 average.
Commodity demand over the next two or three years looks uncertain now. And uncertainty is often the biggest drag on stock prices. You can see the share price of Glencore in 2023.
But on those basic measures, the stock really looks cheap to me.
Insurance
I think insurance stocks are also good value now. And I guess Legal & General (LSE: LGEN) stands out in its exceptional combination of P/E and dividend yield.
After several years of stock prices, estimates make both moves in about seven years. Again, about half the average FTSE 100 P/E. And this time, no earnings are predicted to drop on the horizon.
The forward dividend of 7.3% is also higher than the market average, which makes for a rare combination of value that appeals to me.
economy
The risk, I think, comes from the uncertain economic outlook. Oh, and the pressure that puts financial stocks in general.
The insurance sector can be cyclical, with volatile stock prices. And dividends are perhaps not the most reliable, prone to being cut from time to time. Legal & General hasn’t cut its dividend in the last decade, mind you, while others have.
Diversification
Again, I think Legal & General looks dirt cheap on fundamentals.
In fact, these two are on my list of candidates for my next purchase. And the best way I can see to balance the uncertainty and risk is to buy it as part of a diversified dividend portfolio.
Thus, the down cycle in the commodity business should lead to a decline. And the same goes for the sentiment of the financial sector.
And when both things happen together? I think it’s time to buy and lock in some solid long-term dividend yield.
[ad_2]
Source link