P/Es around 8 and 5%+ dividend yields! Here are 3 of my favourite FTSE 100 value shares

Looking for the FTSE 100’s greatest bargain shares? I think investors could be in for a treat with these high-yielding value stocks.

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Companies from across the FTSE 100 have soared in value as appetite for UK shares has picked up. But don’t be mistaken. London’s premier share index remains packed with brilliant bargains.

Here are three of my favourites. Each trades on a price-to-earnings (P/E) ratio that’s lower than the index average of around 11.

What’s more, their dividend yields smash the Footsie average of 3.5%. Here’s why I think they could be great long-term investments.

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WPP

Created with Highcharts 11.4.3WPP PriceZoom1M3M6MYTD1Y5Y10YALL6 Apr 20202 Apr 2025Zoom ▾Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '24Jan '252021202120222022202320232024202420252025400600800100012001400www.fool.co.uk

Forward P/E ratio: 8.1 times. Dividend yield: 5.4%

For a highly cyclical share, advertising and communications colossus WPP‘s (LSE:WPP) been an excellent dividend payer down the years.

Indeed, despite problems like runaway inflation, high interest rates, economic trouble in China and other post-Covid hangovers, annual payouts have risen almost 65% since 2020.

There’s no guarantee WPP will be able to keep this run going. It froze the dividend last year in response to upheaval in the ad industry.

But its past record means I’m not ruling anything out. City analysts certainly expect WPP to keep delivering large dividends, as reflected by its large yield.

Combined with that rock-bottom P/E ratio, I think the firm’s worth serious consideration today.

HSBC

Created with Highcharts 11.4.3HSBC Holdings PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Forward P/E ratio: 6.9 times. Dividend yield: 9.3%

With one of the biggest forward yields on the Footsie, I think HSBC (LSE:HSBA) shares also merit serious attention. And I don’t think the Asian banking giant’s just a flash in the pan as an income hero either.

Dividends here are highly sensitive to broader economic conditions. They fell heavily following the 2008 crisis, for instance, and during the Covid-19 pandemic. And at the moment, problems in China’s economy poses a risk to future payouts.

Yet I believe HSBC’s still looking good to meet analysts’ dividend forecasts. Right now, China looks set to avoid a sharp slowdown that would hammer earnings. And the bank also has significant financial strength to help it pay a large dividend (its CET1 capital ratio was 15% as of June).

I believe too, that the bank will deliver solid long-term dividend growth, underpinned by soaring emerging market demand for financial services.

Rio Tinto

Created with Highcharts 11.4.3Rio Tinto Group PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Forward P/E ratio: 8.4 times. Dividend yield: 7.1%

Like HSBC, Rio Tinto‘s (LSE:RIO) also vulnerable to economic conditions in China. As a major commodities consumer — it sucks up half of the world’s copper alone — the country’s a significant influence on the prices that mining firms charge for their product.

Having said that, I believe this threat is reflected by Rio’s ultra-low valuation. In fact, from a long-term perspective, I believe the possible rewards of owning its shares today outweigh the risks.

Profits are cyclical, but I’m tipping them to balloon over the next decade as raw materials demand heats up. Metals consumption’s expected to take off thanks to growth in the construction, electric vehicle, renewable energy, artificial intelligence, and consumer electronics sectors alone.

And thanks to its wide spectrum of products — Rio sells iron ore, lithium, copper and aluminium, for instance — it has multiple ways to capitalise on these growth opportunities.

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HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Royston Wild has positions in Rio Tinto Group. The Motley Fool UK has recommended HSBC Holdings. 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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