2 dirt-cheap UK shares (including a 6.4% dividend yield) I’d buy today!

I’m on the hunt for the best cut-price British stocks to add to my Stocks and Shares ISA today. I think these cheap UK shares could be too good to miss.

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I’m searching for the best cheap UK shares to buy for my shares portfolio. Here are two bargains I’m thinking of buying right now.

Playing the online retail boom

The spread of Omicron poses a threat to stacks of UK shares as we move into 2022. Urban Logistics REIT (LSE: SHED), on the other hand, is a stock that could benefit as e-commerce growth rates might receive an additional boost. Analysts at courier Parcel Hero reckon online Christmas spending by Britons will likely match last year’s £35.3bn as people grow more cautious about visiting shops. It’s even possible that new restrictions (or even lockdowns) in the weeks ahead could propel expenditure well past these levels.

Urban Logistics provides the essential warehouse and distribution properties that keep e-commerce moving. So it’s well placed to benefit from any rise to online shopping activity. Rents are soaring in this part of the property market as supply fails to keep up with demand. I’d buy Urban Logistics even though weak consumer spending levels could pose a threat to profits growth.

At a current price of 172p per share, Urban Logistics trades on a forward price-to-earnings (P/E) ratio of 22.2 times. I don’t think this is an excessive valuation as rapid e-commerce growth appears to be here to stay. Besides, a chunky 4.4% dividend yield for this financial year (to March 2022) helps to take the sting out.

6.4% dividend yields

I haven’t stopped championing the wisdom of buying housebuilding stocks like Taylor Wimpey (LSE: TW). Fresh housing data this week revealed how strong trading conditions remain for such businesses.

According to Nationwide, average property prices in the UK rose 0.9% in November from the prior month. This was up from growth of 0.7% reported in October. A perfect blend of low interest rates, massive competition in the mortgage market and financial support from Help to Buy is keeping housebuyer activity ticking along nicely. And I see no end to this trend either. It’s why I already own shares in this particular homebuilder (along with Barratt Developments).

Indeed, Taylor Wimpey has continued hiking its profits forecasts in recent months in light of this bright industry outlook.Demand for homes in the UK continues to outstrip supply by a wide margin, a phenomenon I think will take many years and much hard work by government to solve.

City analysts think Taylor Wimpey’s earnings will rise 7% next year. This leaves the builder trading on a P/E ratio of just 8.5 times. Furthermore, at current prices of 162p Taylor Wimpey carries a mighty 6.4% dividend yield. 

There are risks. Concerns over the strength of the housing market have grown following the full restoration of Stamp Duty. Shocking HMRC data, for example, showed home sales more than halved month-on-month in October as people’s tax liabilities rose. But I feel Taylor Wimpey’s value is hard to ignore. It’s why I’m thinking of increasing my holdings in the business today.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Royston Wild owns shares of Barratt Developments and Taylor Wimpey. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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