2 cheap UK shares I’d buy now for a second income in 2023

I have digested the news that UK inflation remains very high at 10.5%, despite falling for the second month. To maintain my standard of living, I would like to buy another dividend stock that can give me double income this year.

Two FTSE 100 Share I have a handy passive income generator last year. Both companies’ share prices fell on a 12-month basis. Therefore, I will expand my position when I can to invest at a low price.

The stock I am talking about is Lloyds (LSE:LLOY) and M&G (LSE: MNG).

Lloyds Bank

Lloyds’ share price has fallen 8% over the past year. The dividend yield in Bank BTN is 4.36%.

Sticky inflation data put pressure on the Bank of England to raise interest rates for the 10th month in a row. This should benefit Lloyds shares, as banking stocks tend to do well when interest rates rise.

In this environment, Jeffreys analysts anticipate the group’s share buybacks will increase by 17% and 12% this year and next to a total of £1.8bn per year. If this forecast is correct, larger buybacks could lift stock prices because fewer shares available in the market usually translate into increased value.

Granted, it’s not all plain sailing for Lloyds. CEO Charlie Nunn recently said UK house prices could fall by between 8% and 10% this year. As Britain’s biggest mortgage lender, a slumping housing market could weigh on Lloyds shares.

However, with expanding net interest margins and a price-to-earnings ratio of around eight, I think the bank has plenty of upside potential from its current share price. What’s more, the chronic housing shortage in the UK makes me think that any downturn will be long overdue. I will buy more shares today.

M&G

M&G’s share price has fallen 7% in 12 months. Currently, the savings and investment company is yielding 9.13%.

It has been a story of slow progress for this company since its spin-off Prudential a few years ago. But no less ambitious. Hot on the back of £433m in operating capital generation in the first half of 2022 (up 40% on the same period last year), the business has confirmed its £2.5bn target by the end of 2024.

This week, M&G appointed Joseph Pinto as the new CEO of its asset management unit. As the former head of distribution and investment solutions for EMEA, APAC, and LATAM with Natixis Investment Managers, Pinto brings a wealth of experience with him. It will be interesting to see if this leads to better solutions for clients at M&G.

Admittedly, businesses face risks from a potential recession. A slowdown in growth can threaten bumper dividend results. However, no shareholder distribution is risk-free. I would invest more in this passive income superstar as an important holding in a diversified portfolio.

Aim for a second income

If I invest £1,000 evenly between the two companies, I can expect a double income of £67.45 from my shares this year.

As the cost-of-living crisis continues, I will take every bit of passive income I can to ease the pressure on daily expenses. I think Lloyds and M&G Shares are a good place to start. If I had the money, I would invest more today.