2 cheap UK dividend stocks I might buy as stock markets sink!

I think these UK passive income stocks are brilliant bargains following recent share price falls. Here’s why I’d buy them for my portfolio today.

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The sense of panic engulfing global stock markets is growing. UK stocks sank again on Wednesday as Credit Suisse hit record lows and investors worried about banking sector contagion.

The economic outlook has become even more uncertain following Silicon Valley Bank’s collapse. Yet I for one don’t plan to follow the herd and start selling my shares. I believe the stocks I’ve bought will still deliver exceptional long term returns.

Susannah Streeter, analyst at Hargreaves Lansdown recently commented: “The current turbulence may be unsettling, but long-term investing takes endurance and patience and rather than switching and ditching stocks, riding out the storm is almost always a good strategy when things look rocky.”

Two shares on my radar

Taking a long-term investing approach is often the best way for investors to make market-beating returns. It’s why I’m considering buying more UK shares for my portfolio today. In my opinion, recent falls now make many British stocks too cheap to miss.

Here are two London Stock Exchange bargains I’m thinking about snapping up today.

#1: DS Smith

Boxmaker DS Smith (LSE:SMDS) has been one of the biggest FTSE 100 fallers of the past week. So I’m considering buying more of its shares for my investment portfolio.

Today the firm trades on a price-to-earnings (P/E) ratio of 9.6 times for 2023. It boasts a mighty 5.9% dividend yield as well.

Trading at the packaging powerhouse could suffer if consumer spending sinks in the nearer term. However, on a longer time horizon I’m expecting profits here to soar.

The growth of e-commerce means demand for its boxes should keep climbing. I also think its decision to move away from plastics will be a big earnings booster as companies look to improve their eco credentials.

Finally, DS Smith has an impressive history of making earnings-enhancing acquisitions. And it has plenty of financial firepower to continue expanding its operations. Its net debt/EBITDA ratio stood at just one as of October.

#2: ITV

Fresh share price falls at ITV (LSE:ITV) leave the broadcaster trading on an undemanding forward P/E ratio of 12.7 times. It also boasts a passive income-boosting 6.1% dividend yield.

Like DS Smith, this UK media share is also vulnerable during times of economic stress. Marketing budgets are among the first things companies cut when profits fall, meaning ad sales for commercial broadcasters can plummet.

Yet as a long-term investor I find ITV highly appealing. The business has a great track record in the video on-demand (or VoD) market. And its ITVX service that launched in December could take its streaming business to the next level.

ITVX added an extra 1.5m subscribers in the first two months of operation. And it has plenty of room for extra growth as viewer habits change.

Statista believes the UK VoD market will grow at an annualised rate of 8.92% between now and 2027. Like DS Smith, I think the FTSE 250 business could be too cheap to miss right now.

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 assessed. Consider taking independent financial advice.

Royston Wild has positions in DS Smith. The Motley Fool UK has recommended DS Smith, Hargreaves Lansdown Plc, and ITV. 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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