There are a lot of cheap-looking shares even in the top flight of the UK stock market right now. Not only that, but some of them have an attractive dividend yield to boot.
While the average FTSE 100 yield is currently around 3.6%, the trio of UK shares I’ve highlighted for investors to consider each offers a yield of 6.6% or higher.
British American Tobacco
For starters, there is a business sector that is perennially popular with dividend lovers: tobacco.
British American Tobacco (LSE: BATS) is the force behind lots of well-known brands globally, such as Lucky Strike and Rothmans.
Tobacco is big business, but not without its challenges. The health risks are well known, and fewer and fewer people are taking up smoking cigarettes.
Still, while declining cigarette sales pose a serious risk to revenues and profits for British American, it is scrambling to grow non-cigarette sales. Its premium brand portfolio and distribution network could help it there.
Cigarette sales also remain substantial, with the firm shifting close to 10bn cigarettes a week on average. This UK share has raised its dividend annually for decades and currently yields 7.7%.
Legal & General
The dividend-raising track record of fellow FTSE 100 share Legal & General (LSE: LGEN) is less consistent.
It held its dividend per share flat one year during the pandemic and cut it after the 2008 financial crisis. Its current goal is to grow the dividend per share annually by 2%. The yield is already a tasty 8.8%.
Is such a high yield a red flag?
Maybe. Legal & General has been a weak performer in some ways. Sure, its share price is up 32% in five years, which sounds impressive. But that is below blue-chip UK shares overall: the FTSE 100 index has risen 49% during that timeframe.
Plans to sell a big US business could help support the dividend for now, but risk lower profits in future.
Still, I like the company’s strategic focus on retirement-linked financial services, its proven business model, strong brand, and large customer base.
WPP
One UK share I recently purchased for my own portfolio after a share price crash is ad network giant WPP (LSE: WPP).
The share price has leapt by a fifth in little over a month, but is still down by a third since mid-December.
At that price, the yield is 6.6%. The company has held its dividend per share flat since cutting it during the pandemic.
That does not seem like a sign of confidence and indeed WPP faces multiple risks, with an economic downturn and AI both threatening demand for some of its services.
Still, while advertising is evolving, it is not going away. WPP’s large agency of networks, deep expertise, and vast client roster all stand it in good stead to seize future opportunities, I reckon.
That could be good for free cash flows and help keep the dividends coming.
