2 dirt cheap value stocks for big dividends

Over time, I developed and perfected my investment strategy. And after 37 years, I’d rather have value stocks than any other type. These shares trade at low multiples of earnings, while often paying decent dividends.

And when Mr. Market has another tantrum and trashes the stock price, I’m eager to buy more cheap shares.

Out of 100 shares FTSE 100, only 15 have gone up in the past month. Another 85 stocks fell, with losses ranging from 0.5% to 31.5%. Trawling through this long list of losers, I found some shares that look good to me.

Here are two trading at deep discounts after the FTSE 100 fell 8% from its February 16 peak.

1. Barclays

Barclays (LSE: BARC) shares were among the worst performers since February 16. For me, it’s probably the biggest purchase in Footsie right now. Based on these numbers, the stock looks very undervalued to me.

Barclays shares are at 7.5% of their 52-week low, having lost nearly five times their value in one month.

Looking at Barclays’ dividend yield of 5.1% per annum, I would like to buy more of this stock. What is surprising is that this cash payout is covered four times by the end result. Although the bank has a tough 2023, this cash yield looks solid to me.

However, with the economy weakening and consumer confidence low, 2023 could mean higher loan losses for Barclays. Even so, I see Blue Eagle stock as one of the most undervalued stocks. At these prices, it looks like an absolute steal to me.

2. Anglo American

Although less well-known than Barclays, the global miner Anglo American (LSE: AAL) has a market value 50% higher than the bank. Anglo is the world’s leading producer of platinum and also mines copper, diamonds, nickel, iron ore, and coal to make steel.

Of course, mining is a dirty business, so Anglo doesn’t score highly with environmental, social and governance (ESG) investors. But when commodity prices were high, Anglo and its peers generated a burst of cash for shareholders.

Here’s how the stock stacks up today.

Although Anglo shares have fallen by almost a quarter in the past month, they have almost halved in five years. That figure does not include cash dividends, which this Footsie company likes to pay.

In addition, Anglo’s huge cash yield is covered almost twice by earnings. Even if commodity prices and group earnings fall in 2023, these cash payments may not be cut. I don’t have Anglo shares, but I like it, so it’s on the buy list.

Of course, if the global economy weakens in 2023, reducing commodity prices, then Anglo’s profits will stagnate. Indeed, I expect all group earnings to be lower this year. But I’m not worried, because I’m playing the long game when it comes to buying value stocks!