The Motley Fool

FTSE 100 fireworks! 2 cheap dividend stocks I think could help you get rich and retire early

Now yields at Polymetal International (LSE: POLY) aren’t as sensational as some of those listed on the UK’s most prestigious share index. For 2019, this sits at 3.7%, missing the FTSE 100 forward average of around 4.5% by quite some distance.

What makes the gold digger such a formidable income stock, however, is the pace at which it’s expected to continue raising annual dividends. With City analysts predicting strong double-digit-percentage earnings growth throughout the next couple of years, 2019’s predicted reward comes out at 60 US cents per share, up from 48 cents last year. And it’s expected to register at 74 cents in 2020, moving the yield a shade above that blue-chip average.

Big yields, low cost

What’s more, with production booming and gold demand sailing higher, Polymetal is in much better shape to meet City dividend projections than many other Footsie-listed shares are. Indeed, latest figures from the World Gold Council showed holdings in gold-backed exchange-traded funds (or ETFs) hit record levels in the third quarter of 2,855.3 tonnes, driven by quarterly ETF inflows reaching levels not seen since the first quarter of 2016.

Commenting on the reasons behind gold demand increasing to 1,107.9 tonnes in the third quarter, the World Gold Council said that “the primary factors behind this price momentum continued to be ongoing geopolitical tensions, concerns of a slowdown in economic growth, lower interest rates and the level of negative yielding debt.” And there’s plenty of cause to expect these catalysts to remain in place in 2020.

One final thing to note about Polymetal: despite its solid earnings outlook, it still changes hands on a forward P/E multiple of just 14.1 times. For income chasers on a tight budget, I consider it to be a brilliant buy before Fireworks Night.

11% dividend yields!

I’m a proud owner of Taylor Wimpey (LSE: TW) stock and, in my opinion, it remains a terrific purchase for income-hungry investors. At current prices, it trades on a forward P/E ratio of 8.3 times and boasts a show-stopping 10.9% corresponding dividend yield.

In fact, at these levels, I’m tempted to load up on some more of its shares. Latest news on government-led housebuilding activity certainly gave me fresh reason to be bullish on the Footsie firm’s long-term profits outlook. According to the National Audit Office, a major government pledge made in 2015 to build 200,000 starter homes by the close of the decade has failed to yield even a single new property.

The news adds fuel to the argument that government isn’t serious in addressing the country’s homes shortage, a point I addressed in a recent piece. In this climate, the likes of Taylor Wimpey can expect their newbuilds to remain in high demand and at respectable prices too, given the likelihood of low interest rates persisting and first-time buyer appetite remaining buoyant, putting the pressure on the country’s already-colossal supply shortage. I’d intend to hold this particular blue-chip well into the next decade, at least.

You Really Could Make A Million

Of course, picking the right shares and the strategy to be successful in the stock market isn't easy. But you can get ahead of the herd by reading the Motley Fool's FREE guide, “10 Steps To Making A Million In The Market”.

The Motley Fool's experts show how a seven-figure-sum stock portfolio is within the reach of many ordinary investors in this straightforward step-by-step guide.

Simply click here for your free copy.

Royston Wild owns shares of Taylor Wimpey. 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.