Reliability

Since I’m a long-term investor, a dependability in receiving dividends regularly is important to me. I think targeting historically reliable dividend payers could work best for my portfolio.

My logic here is that if I invest in a company that pays out in both good times and bad, then I’m more likely to hit my monthly £1,000 target. I want to know that my payments are coming in whether we’re mid-recession, or in the middle of an economic boom.

Looking into companies who continued to pay out during periods of uncertainty (such as the Covid-19 pandemic) has been my starting point.

I’ve also looked into companies who have held or grown dividends every year for a long period.

British American Tobacco, BAE Systems and Unilever are three companies that I like from this perspective. They’ve all paid out growing dividends in each of the last 10 years.

Higher yield

A higher dividend yield will allow me to reach my goal by investing a lower amount at the outset.

For example, the average dividend yield for the three companies noted above is 4.3%. Therefore, I’d need to invest a whopping £278,000 to earn £12,000 per year in dividends!

However, if I picked out higher yielding companies, I wouldn’t need to invest as much.

A combination of Persimmon, Rio Tinto and Barratt Developments would currently give an average yield of 12.1% if I invested in each equally. At this yield, I’d need a portfolio size of £99,000 to reach my £1,000 per month goal.

Frequency of payments

It’s important to note that listed companies pay out dividends at a different frequency to each other.

Some pay quarterly, others annually. So whilst my goal is to reach £1,000 per month in dividends, I’m actually likely to receive more than this in some months, but less in others.

Alternative approaches

Dividend shares aren’t the only way I could reach £1,000 per month. If I targeted growth stocks and took regular withdrawals, I could achieve the same goal in theory.

However, my worry with this is that the wider economy impacts share prices across the board. So in a bear market, I’m likely to be shrinking my portfolio substantially if I withdraw £1,000 per month.

I only invest in FTSE 100 or FTSE 250 companies in my portfolio. There are, of course, smaller companies paying large dividends frequently. But straying outside of the FTSE indices is beyond my investment portfolio risk appetite!

I think building my portfolio with dividend shares is a great way to earn passive income. I’m working towards hitting my £1,000 per month goal as soon as possible!

The post Can dividend shares earn me £1,000 a month in passive income? appeared first on The Motley Fool UK.

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• How £100 can start a portfolio of UK stocks
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James Yianni has positions in Unilever and Persimmon. The Motley Fool UK has recommended British American Tobacco and Unilever. 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.

I’ve always liked dividend shares for my portfolio. And I think targeting those with the highest yield could make me a million!

Dividend shares

The average yield in the FTSE 100 is currently sitting between 3% and 4%. This is not to be sniffed at. It’s well in excess of the Bank of England base rate, so represents a good place to put my spare cash.

However, some of the higher dividend payers in the FTSE 100 are offering well above the average. At the time of writing, some of the top dividend payers are Persimmon (16% dividend yield), Rio Tinto (11%) and Abrdn (10%).

The FTSE 250 also has several companies offering a dividend yield above 10%.

Now, of course, there is more to an investment than dividend yield alone. And these yields will change over time. But this information shows me the potential returns if I reinvested those dividend payments.

And if I add into the mix a steady regular £250 per week investment, the exponential curve could be very steep!

How long will it take to get to £1m?

This approach may never take my portfolio value to a million, but with some simple maths, I can make an estimate.

If I start today with nothing, and purchase £250 per week of FTSE shares averaging a 10% dividend yield, my portfolio would reach £1m in year 22. And at this point, I’d only have put in £286k from my regular weekly payments!

When I compare this to investing in average-yielding FTSE shares, say 4%, it would take me 36 years, and I’d have put in almost half of the £1m myself!

For both scenarios, I’m assuming I receive all the dividend income at the end of the year and re-invest it immediately.

Other factors

It’s important to consider other factors that could impact this plan.

The companies that I invest in to yield 10% dividend return will change in value as the share price rises and falls. They could reduce in value, meaning it would take longer to reach my £1m goal. Or increase in value, meaning I reach my goal quicker.

There is also a risk that the companies I invest in don’t pay dividends at 10% yield for each of the next 20 or so years. Again, the impact of this if the yield is reduced would be that my goal is reached later.

I might also be able to find companies offering above 10% yield outside of the FTSE indices. But for me this comes with too much risk. So I’ll be sticking to large, proven businesses listed in the UK.

With interest rates still low, I think high dividend FTSE shares are a great way of trying to grow my portfolio to a million!

The post How to aim to become a millionaire by investing £250 a week in FTSE shares appeared first on The Motley Fool UK.

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• At 7,000 points, the S&P 500 looks bloated. How should investors navigate this market?
• How £100 can start a portfolio of UK stocks
• How £16,000 can generate a second income in a Stocks and Shares ISA

James Yianni has no position in any of the shares mentioned. 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.

1. Profitability

It may sound simple, but I like profitable businesses in my portfolio. Lloyds have been posting consistent profits for years. Net profit for financial year 2021 was £5.8bn, its highest in the last five years.

When examining the quarterly figures, the three months to June 2022 were also highly profitable, bringing in £1.6bn at a net profit margin of 36.6%! This is considerably better than the last two quarters, but not as good as June 2021, where the net margin exceeded 50%!

From a shareholder point of view, this often translates into dividends. The mortgage lender currently has a dividend yield of 4.7%. This is well above the FTSE 100 average, which is sitting at between 3% and 4%.

Lloyds also has a solid history of paying dividends. It has consistently paid out interim and final dividends since 2015, with a brief hiatus through Covid-hit 2020.

2. Revenue rebound

As a shareholder, it’s pleasing to see that revenues are back to 2019 levels.

The pandemic impacted the 2020 results significantly. The bank saw a 34.9% decline in income for financial year 2020, which was cause for concern amongst investors.

But revenue has rebounded back to £17.1bn in 2021. The half-year results for 2022 led to an announcement of enhanced guidance for the full year. This is a great sign that the recovery is being sustained.

3. Outlook

More than half of Lloyds’ income comes from retail banking, and its half-year results showed substantial growth in mortgage balances and consumer credit card balances. Consumer banking is a competitive market, so being able to post growth at any stage is a good sign, in my opinion.

The wider economic climate will also help. Rising interest rates are good news for banks. With the Bank of England looking set to raise interest rates again at its next meeting, this will improve profitability for Lloyds.

Intervention by the government on the cost-of-living crisis could be a bonus for Lloyds too. Energy bills being capped, for example, might mean more customers can apply for mortgages. This is good news for a bank that focuses on the retail banking sector.

I do consider there to be a risk that dividend payments stop if the UK moves into a recession. But it seems to me as though the potential upsides outweigh the risks.

On balance, this is a company I really like in my portfolio. I’m strongly considering adding to my existing position.

The post The Lloyds share price looks cheap for these 3 reasons appeared first on The Motley Fool UK.

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James Yianni has a position in Lloyds Banking Group. The Motley Fool UK has recommended Lloyds Banking Group. 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.

Falling share price

A falling share price is sometimes a warning that puts off investors. However, I see it as an opportunity to potentially grab a bargain!

BT’s share price has dropped 13% over the past year, and a massive 10% in the last month! It’s currently trading at 145.5p.

The recent sell-off is down to the release of Q1 results for FY23. Revenues were essentially flat, and profit before tax fell by 10% compared to this time last year. Not exactly a surprise with inflation in the UK skyrocketing.

From an overarching perspective, I still think this is a solid business. It’s profitable, and interestingly improved its earnings per share by 7% in the same quarter. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) has also improved, and this is the message that management has been trying to push.

Growth potential

I actually think BT is well placed to ride out a potential recession and the ongoing battle the UK is having with inflation.

It has a massive infrastructure in the UK. With 5G on the horizon, this puts BT in a great position to capitalise on an emerging market.

BT also has a strong existing customer base. It has a relationship with 50% of UK households in some form. This is a great springboard to be able to drive revenue growth over the coming years.

Dividend delight

BT currently has a dividend yield of 5.3%. This is well above the FTSE 100 average, of between 3% and 4%.

It has a strong history of paying out to shareholders too. Except for Covid-hit 2020 and 2021, the telecoms giant has consistently delivered dividends to shareholders twice a year since 2002!

Since I’m looking to hold for the long term, this is great news for my portfolio.

Downsides?

BT also operates in a competitive market. Key rival Vodafone is also looking like a shrewd investment at the moment, in my opinion. So there is an opportunity cost potentially there.

There has also been strike action from members of the Communication Workers Union that BT has had to contend with in recent weeks. This, of course, takes up management time and limits productivity and service delivery in the short term. But it could be a sign that salary costs may need to rise in the coming months, and that will have a knock-on effect on profitability.

BT looks to have the potent combination of strong growth potential and likelihood of dividend payouts. The fall in share price looks as though it could be my chance to take up a position on BT whilst it’s trading at a cheap price.

The post Why I’m targeting BT shares in September appeared first on The Motley Fool UK.

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James Yianni has a position in Vodafone. The Motley Fool UK has recommended Vodafone. 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.

When the Bank of England raised interest rates in August, it warned the UK would fall into a recession later this year. Typically, a recession causes panic selling of shares, resulting in a stock market crash.

So I’m preparing to invest in companies whose share prices fall because of panic selling, and not because of their underlying performance.

My investment strategy is to target strong businesses and hold for the long term. I define this a minimum of five years, but I ideally aim for more.

So with a recession being forecasted by the Bank of England, I’m honing my plan for identifying stocks that might trade at a discounted price if a recession does hit.

What happened during the last recession?

The last UK recession occurred in the first half of 2020, following the declaration of a lockdown because of the Covid-19 pandemic. True to form, the UK stock market plummeted.

The FTSE 100 was trading at 7,403p on 21 February 2020, and 5,190p by 20 March 2020. This represents a 30% reduction in one month! That’s just the average, some stocks fell by a higher percentage than this.

The recovery back to “pre-Covid” levels took just under two years. On 7 January 2022, the FTSE 100 was trading at 7,485p.

Investing amidst all the uncertainty was scary at the time! But it proved to be great for opening a position on companies at a snip of the price they should have been trading at!

The risks

There is always a chance that companies don’t bounce back. Recessions are a time when businesses do restructure, revise their targets and can shrink. This can mean they lose their competitive advantage to rivals.

I try to mitigate this risk by targeting blue-chip companies that are established in the FTSE 100. These are organisations that have a history of innovating and re-inventing themselves.

How I’m targeting stocks for the next recession

I’ll be targeting stocks in ‘recession-resistant’ industries. Specifically, supermarkets, consumer staples and cosmetics. This is because I think people will continue to buy products these companies produce throughout a recession.

I’ll be avoiding companies who sell luxury goods or experiences, as when consumers have less disposable income, these are often the first things to be cut from their budget.

The stocks currently on my radar are Unilever and Sainsbury’s. These two companies hit all the markers I’m looking for in a long-term investment.

I’m also monitoring Britvic. It’s a FTSE 250 stock I’ve been looking to buy more shares in for some time.

I already have a position in each of these stocks. Adding to my current shareholding when they’re trading at a bargain price is certainly not an opportunity I’m looking to pass up!

Overall, I think a UK recession represents a great time to buy shares at discounted prices. However, it’s important to target the right companies.

I’m going to be monitoring the market closely. I will certainly buy more than I usually do after the stock market crashes!

The post The recession-resistant shares I’d target for any stock market crash appeared first on The Motley Fool UK.

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James Yianni has positions in Unilever, Sainsbury’s and Britvic. The Motley Fool UK has recommended Britvic, Sainsbury (J), and Unilever. 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.

There has been a lot of volatility in the FTSE indices this year. And as a result, I think there are plenty of cheap UK shares out there that can provide me with high-quality returns over the long term.

I start by looking at three key metrics when considering whether a company is a good investment. Profitability, dividend yield and share price. Simplistically, if a profitable business that pays out dividends is trading at a cheap price, then there’s a good chance I might get some value out of it.

I’m always looking to hold for the long term, so considering the business’s viability for a successful future is also important to me.

I’ve picked out two companies that I think represent a good investment today.

Vodafone

Currently trading at 116p, the Vodafone (LSE: VOD) share price has mostly been trending downwards recently. It’s down 5% over the last year, but has dropped almost 10% in the last month!

The telecoms juggernaut has recently returned to profitability, posting a net profit of over £2bn in 2022. This has followed on from loss-making financial years 2019 and 2020, and a small profit in 2021. Revenues have been stable over this period at between £43bn and £46bn, whilst expenditure for each year has fluctuated.

When it comes to dividends, Vodafone has consistently paid out, even in loss-making years. The current dividend yield is sitting at 6.5%, which fares very well against the FTSE 100 average of around 4%.

Vodafone announced recently that it will sell its Hungarian business operations. The deal is expected to bring in £1.5bn with a view of streamlining operations and reducing net debt. I always like signs of a company wanting to streamline, and with inconsistent profitability being my primary concern with this company, I think this is good news.

Taylor Wimpey

Taylor Wimpey (LSE: TW) shares are 111p at the time of writing, an astonishing 38% lower than this time last year!

The building trade is one that sees higher volatility in a wider economic downturn. So perhaps the share price drop isn’t a huge surprise in the context of supply-chain issues, a cost-of-living squeeze and a possible recession on the horizon in the UK.

But I think this company represents excellent value at its current share price.

The housebuilder has consistently recorded profits over the past five years, and recent quarterly figures are showing a net profit margin of 12.5%.

It’s also encouraging to read about Taylor Wimpey’s dividend policy. It states:

“Dividend policy is to return c.7.5% of net assets to shareholders annually.”

Whilst the dividend yield is currently sitting at a healthy 8%, it’s also important to point out that dividend payouts are linked to the “cyclical market” in which Taylor Wimpey operates. We saw this play out during Covid-hit 2020, where no dividend payments were made.

Overall, I think both companies represent great value right now! I will be adding them to my portfolio in the very near future.

The post Two cheap UK shares to buy now appeared first on The Motley Fool UK.

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James Yianni has no position in any of the shares mentioned. The Motley Fool UK has recommended Vodafone. 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.

I’m always looking for companies that generate steady returns, and I think now could be a great time to add the UK’s biggest retailer to my portfolio to increase passive income.

Share price climbing

At the time of writing, the Tesco (LSE: TSCO) share price is 261.5p, and this is down 11% since the start of 2022, but has been mostly trending upwards since the 2022 AGM in mid-June.

Every little helps

As leader of the so-called ‘Big Four’ grocers, it’s not too much of a surprise to see long-term profitability in the underlying financials.

The food seller has posted net profits of over £1bn in each of the last five years except for Covid-hit 2020 (where profits were still £0.97bn!). Over the same period, revenues have been reliable and predictable, sitting between £57bn and £64bn.

When looking at profit margins, the figures are slightly less impressive when compared to some FTSE 100 peers. Net profit margin for 2022 was 2.41%, although this is in line with that of rival supermarket Sainsbury’s net margin of 2.26% for its financial year 2022.

Profitability pays

Tesco’s dividend yield is currently sitting at 4.03%, marginally above the FTSE 100 average.

But the key to generating regular returns over the long run is consistency. And when it comes to dividends, I think it’s fair to say Tesco has been consistent. It’s paid out interim and final dividends every year for the past five years. This was after a period with no dividend payments between 2015 and 2016, but its policy currently seems to be to reward shareholders, and that is good news for my portfolio and passive income.

Future outlook

With the UK cost-of-living crisis in full swing, Tesco is already seeing an impact on consumer spending. In June, it backed up data from the Office of National Statistics suggesting that consumer spending habits are changing, with customers seemingly spending less in supermarkets because of inflation.

But I think Tesco is almost uniquely placed in the retail space to continue delivering profits and dividends to shareholders.

Tesco is well known to have significant purchasing power in core food and beverages markets, where suppliers know that not stocking their products with the UK’s biggest supermarket may have significant consequences for the viability of their business. This puts Tesco in a strong position to be able to manage costs and to maintain margins through any economic environment.

In addition, Tesco has a heavily diversified portfolio, both in terms of products being sold, and in terms of geographical markets it’s operating in. So whilst it’s fair to say the impact of the UK cost-of-living crisis will hit Tesco, the fact that it’s operating in other regions where inflationary factors are different to the UK — and that it stocks many inelastic products that consumers need to buy regardless of price — makes it seem unlikely that sales drop substantially.

Overall, I think Tesco represents a compelling opportunity for generating passive income in my portfolio. Its consistent financial performance and dividend payout is something that I really think I could rely upon over the next few years, so I’m strongly considering taking a position.

The post Should I buy Tesco shares to boost my passive income? appeared first on The Motley Fool UK.

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James Yianni owns shares in Sainsbury’s. The Motley Fool UK has recommended Sainsbury (J) and Tesco. 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.

Putting my money to work in FTSE 100 companies can be a great way of bringing in extra cash without lifting a finger! So I’ve picked out three shares that I think will keep providing regular earnings over the long term, based on their dividend history, current share price and past financial performance.

Legal & General

At present, I can buy shares in financial services giant Legal & General (LSE: LGEN) for 285.9p, 6.3% less than it would have cost me in January 2022.

But the real stand-out statistic is its dividend yield, which is currently sitting at 8.4%, twice the FTSE 100 average!

Having consistently recorded profits of close to £2bn for the past five years, and increased net profit margin to an impressive 21% in 2021, the actual dividend per share paid out has grown and grown over that period. In 2021 the total dividend per share was 18.45p, and the 2022 payout is looking like it will be higher still, with the interim dividend exceeding the prior year by 5%.

With a great dividend payout history, I think this stock looks like a great passive income vehicle.

Imperial Brands

Shares in Imperial Brands (LSE: IMB) cost 19.5% more than it did this time last year, now 1,907p, but it is still carrying a sizeable 8.4% dividend yield.

Recent annual revenue has been very stable, sitting around the £16bn mark, but profits for 2021 grew to £2.8bn, giving a net profit margin of 17% – almost double that of the previous year’s margin.

Historically, the tobacco seller has paid out four dividends per year, and the 2022 payouts that have been announced are both in excess of prior-year equivalents.

Imperial’s main market is cigarette sales, and the addictive nature of this product will mean it exists as a relatively inelastic good to many consumers. With cigarette sales on the whole slowing, it does mean businesses like Imperial may be able to increase prices to offset the decline in sales of individual units.

A profitable business with dividend payments like clockwork, I still think this stock will deliver regular long-term dividends to shareholders.

Lloyds Bank

Lloyds Bank (LSE: LLOY) is currently trading at 45.74p, which is 10.8% less than the price it was trading at six months ago.

The FTSE 100 mainstay has recorded profits in each of the past five years, and after a slight lull in Covid-hit 2020, its net profit for the financial year 2021 hit a staggering £5.8bn!

That has translated into rewards for shareholders. In recent years, Lloyds has usually paid two dividends per year and, true to form, both an interim and final dividend have been announced for 2022. The company’s dividend yield is sitting at 4.7%, above the FTSE 100 average of 4%.

Having recently lifted full-year guidance due to strong performance this year, I think Lloyds looks a solid investment to bring me bi-annual returns for years to come.

Reasons to be cautious?

Of course, investing in the stock market is never without risk. With a possible recession on the horizon, it wouldn’t surprise me if these companies all reined in their dividend generosity a little while they ride out the storm.

The post 3 top FTSE 100 dividend shares for long-term passive income appeared first on The Motley Fool UK.

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James Yianni has no position in any of the shares mentioned. The Motley Fool UK has recommended Imperial Brands and Lloyds Banking Group. 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.

Online fashion retailer ASOS (LSE:ASC) is currently trading at 966p (just under £10), and is down a staggering 75% in the last year. It’s settled at around this level for around the last month, and I think it has the potential to be my portfolio’s top growth stock beyond 2022 if I buy now, but there is plenty more to consider first.

Share price volatility

The clothing seller’s share price has been historically volatile over the past five years, reaching highs of over £76 per share in 2018, but then falling to trade at under £11 per share in 2020, as with many FTSE stocks it plunged during the first few months of the pandemic.

But over the same five-year period, income has grown by £2bn! And it’s still increasing: revenue for the first nine months of the year is up 2% when compared to the prior year.

So why the peaks and troughs in the stock price?

Well, profits have been harder to come by. Most recently, the 2021 annual figures showed a profit before tax of £177m, and a net margin of 3%. The latest expectation for pre-tax profits in 2022 is at £20-£60m, having been revised from previous guidance of £110-140m. With costs across all industries spiralling, I think it’s fair to say it can expect a squeeze on profit margins too.

When it comes to dividends, ASOS’s policy is to reinvest profits into the business, and not distribute dividends, which is a strategy it doesn’t look set on changing any time soon.

Not such a good (out)look

There are plenty of external factors that could have an impact on the short- and medium-term performance of ASOS, not least the cost-of-living squeeze in the UK (its biggest market), but two recent issues really stand out.

The decision to “suspend sales” in Russia as a result of the war in Ukraine, of course, follows the trend of many blue-chip companies pulling their business out of the country this year. But historically ASOS has done approximately 4% of its business in Russia, and the decision cost the business a reported £14m. A scare for shareholders, but perhaps not customers.

However, the clothing giant could also be about to rile up its core customer base too! The Competition and Markets Authority is said to be looking into ASOS’s ‘Responsible edit’ range following reports that some clothes do not meet its green criteria. With its target demographic being young adults, if the investigation goes the wrong way, ASOS could lose much of its environmentally conscious customer base overnight.

The naked truth

There are clear risks with being an ASOS shareholder right now, and I’m expecting the share price to continue its volatility in the short term. But ASOS still occupies a strong market position in the online fashion market and I think it has clear growth potential over the long term. On balance, I’m still keen to add to my position on ASOS whilst it’s trading at its current price.

The post Should I buy this growth stock at £10? appeared first on The Motley Fool UK.

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James Yianni has positions in ASOS. The Motley Fool UK has recommended ASOS. 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.

Profit growth

The GSK (LSE:GSK) share price is down 2% in the last year, and a staggering 19% in the last month! It is currently trading at 1,515p.

Like many stocks, GSK’s shares plummeted during the pandemic followed by a steady recovery. But the pharmaceutical giant has recorded strong quarterly revenues of around £7bn for the last two quarters, and posted a healthy net profit margin of 12% in the last quarter.

Last week it raised its profit guidance following increased sales of its shingles vaccine, so is forecasting sales to grow 6-8% in 2022. This could be an indicator that the current dividend yield of 5.2% is here to stay.

The recent spin-off of Haleon, which will focus purely on consumer healthcare, could be cause for concern, however. The “demerger” means GSK is no longer operating in this historically profitable market segment.

However, with much of the world now acutely aware of the importance of vaccines and specialty medicines, GSK’s consistent revenues and profit growth make it a great buy for my portfolio.

Dividend king

Aviva (LSE:AV) is trading at 467p at the time of writing. This is down 13% compared to the share price a year ago.

Potential investors might be worried about this, but they shouldn’t be. Its most recent dividend of 14.7p per share is the highest since April 2019, and the dividend yield is currently at 7.1%. The indication to shareholders is that we can expect low to mid-single digit growth in dividends per share from 2024 onwards. These payouts are well above the FTSE 100 average dividend return of between 3-4%.

The Aviva share price jumped this week following the announcement of an interim dividend of 10.3p per share. We were also told about a proposed share buyback scheme being launched. This suggests that Aviva itself sees the current share price as an attractive one.

There are more reasons to be confident when looking at the underlying financials. The insurer has recorded profits every year over the last five years – all in excess of £1.5bn. This is a positive sign that dividends will continue, but I need to remember that dividends are subject to company performance and market conditions.

It’s not all good news, though. A half-year loss of £633m was announced, which is considerably higher than the 2021 half-year loss of £198m. “Adverse market movements” was the reason offered for the result and, given that this is seemingly outside of its control, could be a concern for Aviva.

Overall, these FTSE 100 mainstays both have strong underlying financials. I think they’re trading at a great price right now, and I’m strongly considering adding to my position on both.

The post Two bargain FTSE 100 shares to buy now appeared first on The Motley Fool UK.

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James Yianni has a position in Aviva plc and GSK plc. The Motley Fool UK has recommended GSK plc and Haleon 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.