I’d buy this crashed FTSE 100 share for its near-7% dividend yield!

These five FTSE 100 shares have crashed, losing 18% to 25% of their value in one month. But I’d buy this cheap share today for its bumper dividend yield.

| More on:
A person holding onto a fan of twenty pound notes

Image source: Getty Images.

Despite the ongoing US stock-market slump, the UK’s FTSE 100 index has held up well so far this year. As I write, the Footsie stands at 7,516.69 points, up 1.8% since 31 December 2021. Not all large-cap shares have held steady in 2022 — but as some share prices have slumped, they look increasingly attractive to me. So there’s one cheap share that I don’t own today, but would buy for its market-beating dividend yield.

The FTSE 100’s winners and losers over one month

Over the past month, the FTSE 100 has gained 1.8%. As you’d expect, some shares have done well, while others have lagged behind. Of 100 Footsie stocks, 25 have risen in value over 30 days. These gains range from 0.6% to 14.8%, with an average of 4.2%. Meanwhile, losses among the Footsie’s 75 losers range from 0.3% to a hefty 28.1%, with an average decline of 8.5%.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

However, as share prices fall, bargain-hunting value investors like me actively go hunting for beaten-down, cheap stocks. And among the FTSE 100 five worst performers over the past month, I found one share I’m drawn to for its generous dividend yield.

I’d buy one battered share now for its dividend yield

For the record, these are the FTSE 100’s five biggest fallers over the past month:

CompanySectorShare price (p)One-month decline12-month change
B&M European Value RetailRetail422.1-17.6%-26.5%
Scottish Mortgage Investment TrustFinancial709.00-20.6%-39.1%
Ocado GroupRetail772.4-25.4%-60.6%

As you can see, losses among these five steepest FTSE 100 fallers range from nearly 18% at property group Segro to more than a quarter at online supermarket Ocado Group. The average loss across these five slumpers is over a fifth (-21.1%). But as share prices slide, they often give me an opportunity to buy future earnings and cash dividends at lower entry points. And the dividend yield of one particular loser catches my eye today.

Viva Aviva!

The battered share that I’d buy today is investment and insurance giant Aviva. After losing almost a quarter of its market value in 30 days, this FTSE 100 share now looks cheap to me. Here are its latest fundamentals, following sustained price falls:

Share price429.30p
52-week high606.58p
52-week low384.00p
Market value£12.0bn
Price-to-earnings ratio51.6
Earnings yield1.9%
Dividend yield6.8%

At their current price, Aviva shares lie 177.28p below their 52-week high of 606.58p, hit on 29 March 2022. That’s a collapse of 29.2% in under two months. As a result of this crash, Aviva’s cash dividend yield has surged to 6.8% a year. That’s 1.7 times the near-4% cash yield on offer from the wider FTSE 100.

However, it’s not been plain sailing at Aviva recently. A fiery annual general meeting on 6 May included rude and sexist remarks directed at CEO Amanda Blanc and other female board members. Yet the group plans to return £4.75bn of excess capital to shareholders, worth almost two-fifths of its current market cap. It’s for this capital return and their generous dividend yield that I’d buy Aviva shares today!

More on Investing Articles

Social media and digital online concept, woman using smartphone
Investing Articles

Will Lloyds shares recover in 2022?

Lloyds shares have struggled this year and the looming recession won't help. But I'd still buy them today.

Read more »

Two hands holding champagne glasses toasting each other with Paris in the background
Investing Articles

Can the stock market make me rich even now?

Here are three ways I'm coping with the stock market's recent bout of weakness and aiming to build wealth in…

Read more »

Cogs turning against each other
Investing Articles

3 top investment trusts to buy right now

Investment trusts offer a wide range of options for investors. And in troubled times, they provide some safety through diversification…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

Why hasn’t the FTSE 100 crashed in 2022?

The catastrophic events of 2022 have left investors around the globe fearing the worst for stock markets. And some have…

Read more »

Trader on video call from his home office
Investing Articles

2 inflation-resistant FTSE 100 stocks to buy today

Soaring inflation could dent my returns if I don't take care. Here are two top inflation-resistant FTSE 100 stocks I'd…

Read more »

Tabletop model of a bear sat on desk in front of monitors showing stock charts
Investing Articles

Why a bear market is an investor’s best friend

A bear market can certainly be scary. But any investor tempted to sell might benefit by looking at Warren Buffett's…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

The Rolls-Royce share price could be stuck below £1 for a while. Should I buy?

The Rolls-Royce share price has been trading at penny stock levels since April. Could the stock be a bargain at…

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

I’m aiming to make £45,000 in passive income with UK shares and never work again!

Investing regularly in UK shares can generate a substantial passive income over the long run. Zaven Boyrazian demonstrates how.

Read more »