2 dividend shares with a price below £2 and a yield above 4.3%

Jon Smith applies his stock market filters for dividend shares and finds two he feels could be worthy inclusions in his portfolio.

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I’m very specific with what I’m looking for from the stock market. I apply different screening filters for stocks all the time. At the moment, I’m on the hunt for dividend shares with a yield above the FTSE 250 and FTSE 100 average. At the same time, I’m looking for ideas with a share price below £2. Here’s what I’ve found.

It’s all about ME

The first stock is ME Group International (LSE:MEGP). The FTSE 250 firm’s known for its automated photo-booths, printing kiosks and other vending solutions. At the moment the stock trades at 180p and has a dividend yield of 4.33%.

It’s not just the income side that’s appealing to me. Over the past year, the share price has jumped by 8%.

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Part of the increase in the dividend and the share price relates to the strong performance from 2023. The report hailed “a year of record financial performance”. This was driven by various factors. For example, it expanded abroad in Australia. Further, it launched new partnerships with Central Co-op and Morrisons.

The future looks good, with a modernisation push already under way on existing products. Even with this, the profitability shouldn’t be hindered, so dividends aren’t under threat. In terms of risks, I’d say that it needs to keep focusing on diversifying away from photo-booths and similar machines, as demand for these more traditional services could fade.

Created with Highcharts 11.4.3Me Group International Plc + Lloyds Banking Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Low share price, high income

Another idea is Lloyds Banking Group (LSE:LLOY). It might take some a while to process, but the Lloyds share price is less than £1. In fact, at 58p, it has the lowest share price in the entire FTSE 100.

But there’s a big difference between having a low share price and being undervalued. A stock could trade at £1,000 and be undervalued. When it comes to the bank, the 31% rally over the past year means that, in my eyes, it’s fairly valued. However, I’m looking at this from the income side right now.

A dividend yield of 4.72% is very healthy, and it has been above 5% for most of the past year. The dividend per share payments have been increasing, from 2p in 2021 to 2.4p in 2022 and 2.76p over the last year. This is due to boosted earnings coming out of the pandemic, with higher interest rates also helping the company.

Looking forward, it’s true that interest rate cuts wont be helpful. This is a risk. However, I do think this could be offset by the positive sentiment from consumers. Lower interest rates should make them spend more, able to afford mortgages, and raise confidence to take out loans. All of this should make the bank money.

I like both stocks, and when I get some more free cash will look to allocate it to these ideas.

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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.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking 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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