2 cheap FTSE 100 dividend stocks I’d buy after last week’s washout!

Looking for the best dividend stocks to buy at knock-down prices? I think these FTSE 100 passive income favourites merit a very close look.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Businesswoman calculating finances in an office

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

UK shares have been sold off sharply as worries over the US economy have mounted. But I’m not running for the hills. In fact, I’m looking for top dividend stocks to buy at knock-down prices.

I’ve been investing long enough to know that volatility’s part and parcel of share investing. I also know that, over time, the stock market’s always recovered, and that those who buy when prices are down have a chance to maximise their returns over the long term.

Unfortunately, I don’t have any spare cash in my investing account to make the most of last week’s market slump. If I did, here are two FTSE 100 dividend-paying bargains I’d buy today.

Should you invest £1,000 in Lloyds Banking Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group made the list?

See the 6 stocks

Aviva

Created with Highcharts 11.4.3Aviva Plc PriceZoom1M3M6MYTD1Y5Y10YALL14 Apr 20208 Apr 2025Zoom ▾Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '24Jan '252021202120222022202320232024202420252025200300400500600700www.fool.co.uk

When the US economy catches a cold, the whole world sneezes, as the saying goes. But I believe the fresh decline in Aviva (LSE:AV.) shares makes the company — which operates in the UK, Ireland and Canada — an even more attractive value buy.

The Footsie company now trades on a forward price-to-earnings (P/E) ratio of 10.5 times. And its dividend yield sits at 7.4%, more than twice the index average.

Despite the threat of US contagion, I think things are looking up for the financial services giant. Interest rate cuts last week will likely boost demand for its life insurance, pension, and other discretionary products. And more Bank of England trimming could be coming down the line very soon.

Aviva’s massive general insurance operations should continue to offset weakness elsewhere in the business. Although that weakness remains an issue, spending on house, car, pet and other policies remains largely robust at all points of the economic cycle.

This, in turn, means Aviva should continue to enjoy strong cash flows as premiums keep rolling in, giving it the strength to still pay market-beating dividends. Encouragingly, it’s already sitting on a huge pile of surplus cash, its Solvency II ratio at 206% as of March.

Aviva’s share price has shot 26% higher over the last year. I expect it to recover sharply from last week’s drop.

Phoenix Group

Created with Highcharts 11.4.3Phoenix Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

I’d also look to open a position in Phoenix Group Holdings (LSE:PHNX) if I had spare cash to invest today.

Last week’s market fall leaves the Footsie firm with a 10.2% forward dividend yield. This is one of the largest on the index. Meanwhile, a price-to-earnings growth (PEG) ratio of 0.3 suggests it’s also dirt cheap, based on predicted profits.

Any reading below 1 indicates a share is undervalued. Incidentally, the reading on Aviva shares sits at 0.5.

The beauty of both these shares is that their markets are expanding rapidly. Intense competition remains a threat. But they have an opportunity to deliver impressive long-term earnings growth. This, consequently, could feed into steadily rising dividends over the long term.

Speaking of which, City analysts expect dividends on Aviva and Phoenix shares to keep rising all the way through to 2026, at least. The latter’s Solvency II ratio of 176% as of December also gives it strong foundations to meet these sunny forecasts.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Lloyds Banking Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group made the list?

See the 6 stocks

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 Aviva Plc. The Motley Fool UK has no position in any of the shares mentioned. 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.

Like buying £1 for 51p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Investing Articles

Here’s the dividend forecast for Rolls-Royce shares as Trump rocks the markets

Rolls-Royce shares have joined in the volatility over the past week. However, with the direction being largely downwards, the dividend…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

Dividend yields of up to 11%! Here are 3 UK passive income stocks to consider

Searching for ways to supercharge your passive income with UK dividend stocks? Here are three that have grabbed our writer's…

Read more »

Young Caucasian woman at the street withdrawing money at the ATM
Investing Articles

£10,000 invested in NatWest shares at the start of 2025 is now worth…

NatWest shares surged into 2025, but things have become a little more complicated in recent weeks. Dr James Fox explores.

Read more »

Investing For Beginners

Why the FTSE 250 could outperform the FTSE 100 for the rest of the year

Jon Smith explains why the FTSE 250 could do better than its big brother when factoring in domestic exposure and…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Tariff fears send the Lloyds share price tumbling, but the dividend yield is climbing

Just when the Lloyds Banking Group share price had been rising steadily, along comes a global upheaval to knock it…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

Here’s how a stock market crash could help an investor retire years early

A stock market crash can be alarming -- but for the well-prepared investor, it can also be an exceptional opportunity…

Read more »

Investing Articles

1 key fact to remember in this stock market correction

This writer takes a look at a FTSE 100 investment trust that is catching his eye after the recent massive…

Read more »

Investing Articles

I was wrong about the Tesla stock price!

Tesla stock's been affected more than most by ‘Liberation Day’. But our writer has other concerns about Elon Musk’s company.

Read more »