The Motley Fool

2 cheap stocks with 5%+ dividend yields

Anglo Pacific (LSE: APF) reported “a very strong start to 2017” in its first-half results this morning. The shares initially jumped higher but soon retreated back towards yesterday’s closing price. At around 120p, the mineral royalties group is capitalised at £217m and sits on a cheap earnings multiple and juicy dividend yield. I continue to rate the stock a buy.

Royalties roll

During the first half of the year, Anglo Pacific benefitted from higher commodity prices, favourable exchange rates and increased mining within its private royalty acreage at Kestrel.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

I calculate trailing 12-month adjusted earnings per share (EPS) of 15.77p, giving a price-to-earnings (P/E) ratio of just 7.7. On a statutory basis, H1 EPS was negative. This was due to non-cash charges (mainly related to resource depletion and pricing assumptions), so I’m happy to use the adjusted number as it better reflects the company’s strong cash flows.

Free cash flow of £18.9m in H1 alone is well above the last 12 months’ dividends of £10.1m (6p a share) and supports analysts’ forecasts of a payout of 7p this year, for a prospective yield of 5.8%.

The board said today that commodity prices are ahead of expectations so far in Q3 and that royalty revenues are continuing to benefit from weak sterling versus the US and Australian dollar. This bodes well for the remainder of the year.

Looking further ahead, I note that Anglo Pacific is debt free and has ready access to between $30m and $40m of cash and borrowing facilities for further royalty investments. The board told us that making such investments “is very much the focus for the second half of the year.” This should further strengthen royalty streams for 2018 and beyond.

Bargain brew

Also trading on a cheap earnings multiple with sparkling dividend yield is FTSE 250 brewer and pubs group Greene King (LSE: GNK). Its shares were trading not far off 1,000p towards the end of 2015 but are currently changing hands for 660p. I believe now could be a good time to buy a slice of this £2bn business.

The company posted adjusted EPS of 70.8p for its financial year ended 30 April, giving a P/E of 9.3. Meanwhile, a 33.2p dividend for the year is forecast to rise to 34p this year, providing a prospective yield of 5.2%.

The reasons for Greene King’s current depressed share price and the reason I’m not put off buying the stock at the present time are succinctly summed up in a comment by chief executive Rooney Anand. “Our performance has been achieved against a demanding backdrop of increased costs, weaker consumer confidence and increasing competition. While I expect these challenges to intensify over the next few years, Greene King has a very strong track record of delivery in tough market conditions.”

In light of this track record, and in view of the group’s scale, robust balance sheet and strong cash generation, I believe the depressed share price, low P/E and high yield represent a generous offer by the market.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

The Motley Fool UK owns shares of Anglo Pacific. 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

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.