The Motley Fool

ISA investors! Could this unloved 10% dividend yield help you get rich and retire early?

Image source: Getty Images.

The volatility which has enveloped share markets of late has washed out some pretty good-looking shares. Just as a high tide lifts all boats, the exact opposite is also happens when market makers head for the exits, en masse.

And this leaves plenty of companies trading at dirt-cheap levels. Take Bovis Homes Group (LSE: BVS), for example. The FTSE 250’s drop to six-week lows has prompted further weakness in the housebuilder’s share price too, and this leaves it trading on a forward P/E ratio of just 9.5 times.

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...

But Bovis doesn’t just offer top value from an earnings perspective. With dividends expected to keep rising along with profits over the next couple of years, the company also offers blockbusting yields of 10% and 10.2% for 2019 and 2020.

Brilliant buy

So what’s the catch, you might ask? Well, theoretically, the prospect of a an economically-damaging no-deal Brexit hangs heavy over the likes of Bovis, a situation that could hamper housebuyer activity in the near term and beyond.

Such fears were fanned on Thursday following fresh data from the Royal Institution of Chartered Surveyors (RICS) which showed both buyer and seller numbers shrank in September. The survey also showed the number of new constructions last month dropped to the lowest number since around the time of the referendum in June 2016.

It’s obvious that Brexit is wreaking havoc on the broader housing market, though I would argue this is not as much of a problem for the newbuild specialists. Put simply, there aren’t enough new homes to go around to support the growing numbers of first-time buyers, people who still need somewhere to live whatever the broader economic climate.

This is why Bovis for one continues to witness solid revenues and profits progress, the firm seeing the top and bottom lines grow 9% and 20%, respectively, in the first half of 2019. And it looks as if the same factors that are driving homebuyer demand — namely, confused government housebuilding policy, low Bank of England interest rates, and the Help to Buy purchase incentive scheme — are here to stay for much longer.

Another beautiful bargain?

So Bovis is a bona fide bargain and a great buy today, in my opinion. But can the same be said for Dunelm Group (LSE: DNLM), another FTSE 250 dividend share trading on low valuations?

At current prices, the homewares retailer carries a forward P/E multiple of 14.2 times and sports a jumbo dividend yield of 4.1% too. However, I believe this particular share’s cheap price is a reflection of its high risk profile.

Dunelm Group’s shares sunk 10% on Thursday to eight-month lows on the release of spooky trading numbers. During the 13 weeks to 28 September, like-for-like sales rose 6.4%, although this was around half the rate of growth City analysts had been expecting.

Business has been troubled more recently, Dunelm advising of “mixed” trading in September due, in part, to “a softer homewares market.” But signs of growing sales stress isn’t the only reason why investors have headed for the exits. The retailer also disclosed it expects margins to come under pressure later in the financial year (to June 2020) as currency headwinds likely increase.

The threat created by the botched Brexit process is far more dangerous for Dunelm than for Bovis, in my opinion. And this is why I’m happy to avoid it despite its cheap share price.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Royston Wild 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.

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.