Keeping a close eye on UK shares that trade near one-year lows is a key part of my investing routine. Granted, this isn’t necessarily an indication that a particular stock is cheap. If a company is underperforming, its share price can continue to plummet and dividends can be cut.
Nonetheless, it’s a useful starting point in my search for value investment opportunities. With that in mind, I’m considering buying a couple of FTSE 100 dividend stocks after big drops in their share prices.
So, let’s explore whether I should add these high-yield UK shares to my passive income portfolio.
Anglo American
After a 30% fall over the last year, the Anglo American (LSE:AAL) share price has cratered to a 52-week low. Many analysts expect the dividend yield will fall below 5% this year, but this still beats the Footsie average.
The mining giant has operations around the globe with a portfolio spanning diamonds, platinum, copper, iron ore, and other commodities.
Financial results for FY22 were disappointing. Knocked by inflationary pressures and lower volumes, unit costs rose 15% and underlying EBITDA fell almost 30%.
In addition, net debt soared from $3.8bn to $6.9bn and free cash flow slumped 80% to $1.59bn. I’m concerned by these numbers. If the company fails to reverse the negative trend, I wouldn’t be surprised to see further cuts to the dividend.
Longer term, there are glimmers of hope. Anglo American’s new Quellaveco copper operation in Peru meant the firm increased its global production base by 10%. Demand for the metal is tipped to rise over the coming years due to its industrial applications in renewable energy technologies and electric vehicles.
Nonetheless, I think the short-term outlook remains gloomy for Anglo American shares. I’ll keep a close eye on further results and any potential changes to the dividend, but, for now, this company’s staying on my watchlist.
Hargreaves Lansdown
Another firm that has struggled over recent years is Bristol-based financial services outfit Hargreaves Lansdown (LSE:HL.). The share price has fallen 8% over 12 months and a whopping 59% over five years.
At present, the stock offers a 4.98% dividend yield.
The consumer investment platform market is increasingly competitive, but Hargreaves Lansdown claims an impressive 42% share. What’s more, the group boasts a customer retention rate over 92%, despite the growing number of zero-commission rivals.
It’s a lucrative sector to be in. The company estimates the UK’s addressable wealth and cash market will hit £4trn in 2026 — up from £3trn today.
I think there are signs the stock is oversold. For the three months ended 31 March 2023, net new business climbed 14% year on year to £1.6bn, revenue increased 28% to exceed £188m and it also managed to add 23,000 net clients.
That said, the wealth manager clearly has one eye on its competition. It recently slashed its fees for buying and selling investments, as well as dividend reinvestments. Although this should help in ensuring its customers remain loyal, there’s a risk the move could hurt revenue and profits.
Nonetheless, at a forward price-to-earnings ratio of 12.9, I think the multiple is sufficiently low to compensate for the risks. If I had spare cash, this is one dividend stock I’d buy today to boost my passive income.
