On the hunt for dividends? These 2 shares look enticing with 5% yields!

Buying dividend shares is a great way to start making passive income. With yields above the Footsie average, these two look attractive.

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Targeting dividend shares has become more important for investors over the last couple of years as inflation’s been eating away at pockets.

As much as I like the idea of leaving my cash sat in the bank with relatively attractive savings rates, I know over the long run it makes more sense to have my money tied up in the stock market.

High rates won’t last forever. I’ll keep some cash tucked away for an emergency. However, I’m mainly focusing on putting my money to work.

With that in mind, here are two shares with meaty yields I reckon investors seeking income should consider today.

Burberry

Let’s get the ball rolling with Burberry (LSE: BRBY). The company’s struggled recently as consumers have cut back on luxury spending. But with a yield of 5.9%, it could be a strong addition to a portfolio from an income perspective.

The biggest threat to Burberry is that its share price may keep sliding in the months to come. Multiple profit warnings have seen investors lose confidence in the stock. Adjusted operating profit for the 52 weeks ended 30 March fell by 34% to £418m. It also saw a 17% year-on-year decline in Q4 sales for Asia Pacific, its largest market.

Burberry isn’t alone in its struggles. Many competitors have felt the squeeze of consumers tightening their belts too. But with it currently trading on a price-to-earnings (P/E) ratio of 14.2, that looks cheap by Burberry’s standards.

I think we could begin to see its share price make a comeback in the years ahead. No doubt this will take time. In the short term, rate cuts should boost spending. Looking at the bigger picture, I’m also optimistic spending will pick up again in China as its middle-class continues to expand.

BP

Another contender is oil and gas titan BP (LSE: BP). Not only do its shares look cheap with a P/E of 11, but there’s also a 5% yield on offer.

What impresses me most is the actions management’s taken to boost shareholder value. It has set out the ambitious target of buying back $14bn worth of shares by 2025.

In its Q1 results, it said the $1.75bn share buyback programme announced in Q4 had been completed. As such, it announced a further $1.75bn of buybacks for this quarter.

Alongside rewarding investors, the business is also keen to keep up the momentum with its strategy to boost efficiency and cut costs. By 2026, it’s vying for at least $2bn of cash cost savings relative to 2023. It plans to achieve this through its ongoing digital transformation and enhancing supply chain efficiencies.

There’s one major potential hurdle with BP. The world’s becoming greener and as a result, there’s an attempt from governments to wean their nations of fossil fuels in the decades to come. That will see BP come under more pressure and potential scrutiny.

However, as contradictory as it may sound, it’s likely that BP will play a massive role in helping to turn Britain greener with its large infrastructure and heavy investment capabilities. The firm has continued to build out its renewable portfolio over the last few years as such.

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.

Charlie Keough has positions in Bp P.l.c. The Motley Fool UK has recommended Burberry Group Plc. 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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