2 UK shares I’d like to buy for market-beating cash yields!

As a value investor, I rely on stock filters to find stocks to buy. Indeed, during 2022, my husband bought 11 new shares for our portfolio. We have both of these because they produce tasty dividends and I want to buy more when I have the money.

#1: Law & General

My first dividend dynamo was Legal & General Group (LSE: LGEN), a business I admire for its pedigree and performance. Founded in 1836, L&G is a leading provider of life assurance, savings and investments. It has 10 million customers and manages £1.4trn in assets.

Falling stock and bond prices in 2022 hurt both L&G and its clients. From a 52-week high of 295.7p on 3 February, the stock fell to 201.4p on 13 October. They started to recover, closing at 254.9p on Friday. This gives value FTSE 100 company at £15.2bn – 12.7% lower over the year.

Like most stocks I buy, L&G stock looks cheap to me. It trades at a price-to-earnings ratio of 7.5, for a yield of 13.3% – a considerable discount to the London market. Furthermore, the chunky dividend yield of 7.3% a year is covered 1.8 times by earnings. To me, this shows that cash payments are solid, with room to grow.

However, if the financial markets collapse again, L&G’s earnings and share price could take a hit. If that happens, I might buy more shares for long-term passive income!

#2: Vodafone

The latest stock buy is telecom Vodafone (LSE: VOD), a leading provider of fixed, broadband and mobile communications. Newbury-based multinational, Berkshire was founded in 1982 and now has more than 300m customers in Europe and Africa.

Vodafone equipment was used to create the UK’s first mobile phone on 1 January 1985 and bring the world’s first SMS text message (“Merry Christmas“) in December 1992. Unfortunately, Vodafone has long since become Europe’s largest company during the dotcom boom that turned into a bust in 2000.

At Friday’s closing price of 91.88p, the FTSE 100 company was worth £25bn – just a fraction of its peak value of around £200bn. At the beginning of December, I saw that Vodafone’s share price had dropped significantly, so my husband took the plunge, buying 90.2pa shares.

Typically, the price then immediately collapsed, falling to a 52-week low of 83.24p on 16 December. However, the stock has since recovered to its current level of 91.88p, yielding a small paper gain of 1.9% from its latest holding. Phew.

If I had more money to buy shares, I would add Vodafone shares today. First, because they are down 21.8% in the past year, compared to a 6.5% gain for the FTSE 100. Second, because the price-to-earnings ratio is 14.4 and the earnings are 7% similar to the Footsie more.

Third, I was drawn to Vodafone’s meaty dividend yield of 8.4% per year, although it is guaranteed only 0.8 times by earnings. Although the group has net debt on its balance sheet, this is possible. And I hope that the spring price hike will boost Vodafone’s profits and earnings, fingers crossed.

In summary, I would love to buy more than two of these stocks today – if I had the money to invest, that is!