Is time running out to buy super cheap FTSE 100 dividend shares?
The way top share prices have suffered since the 2020 stock market crash, it looks like the New Year sales that year have just kept on and on and on.
Still, low prices means one good thing. They mean today’s dividend yields are higher than we’d otherwise see.
And now, the FTSE 100 has been storming in 2024. It’s even come close to 8,500 points, so must the good times for dividend seekers end soon? I still see a good number of fat yields that I think long-term investors should consider buying.
Financial sector cash
The two I’ve picked here are both in the financial sector. And both offer forecast dividends of better than 7%.
The first is insurance firm Aviva (LSE: AV.), with an expected 7.2% dividend yield.
The Aviva share price has been picking up since last summer, as the fruits of the firm’s restructuring are starting to ripen. But we’re still looking at a five-year fall of 10%.
At FY time, Aviva announced a new share buyback of £300m. That means the board thinks the shares are a cost-effective purchase at 2024 prices. And it means future earnings and dividends should be spread across fewer shares.
And then, on 23 May, the company posted a 16% rise in premiums for Q1, with a 15% rise in wealth management inflows.
CEO Amanda Blanc spoke of growth across the group, and “real optimism about 2024“.
This is at a time when investors are getting their cash back into the markets, after a dire few years. And I’d expect the reverse to happen next time a squeeze starts tightening, so we have to watch for that.
But on a forecast price-to-earnings (P/E) of 11, dropping to nine by 2026, it’s got to be worth thinking about, hasn’t it?
Global banking
Next up is a bank, HSBC Holdings (LSE: HSBA), with a 7.1% dividend marked in for the current year. And forecasts have it growing in the next few years, along with Aviva’s.
HSBC shares have put in a steady recovery since the 2020 crash. The price is now up 7.5% in five years.
The biggest threat to HSBC right now seems clear. It’s all to do with China, as the Chinese economy has slowed. We also face increasing trade tensions between China and the US, with electric vehicle sales among the latest to face restrictions.
And it shows in forecasts, which have HSBC’s earning per share (EPS) rising in 2024, but dipping in 2025. And there’s then a modest rise on the cards for 2026.
Still, after selling off its Canada busines, the bank has cash to hand back.
In a Q1 update, CEO Noel Quin said: “We have announced a total of $8.8bn of distributions, consisting of a first interim dividend for 2024 of $0.10 per share, a special dividend of $0.21 per share from the Canada sale proceeds, and a new share buyback of up to $3bn.“
These both look like great long-term dividend stocks to me.
