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These 2 cheap FTSE 100 shares pay strong dividends. Here’s why I’d buy them today

Since 10 March 2020, FTSE 100 companies have been trimming, slashing, or scrapping their dividend payments entirely. Thankfully, there are well-run companies with plenty of cash to spare that are still paying out.

And the stock market crash means these businesses are cheaper to buy than they have been in years.

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Confidence is creeping back into markets. The FTSE 100 touched 6,000 recently after the epic lows under 5,000 in mid-March. While markets are recovering, there are still cheap shares that I think are too good to ignore.

Cheap FTSE 100 stars

The two I’ve chosen are highly diversified multinationals. To me this means they have the best shot at coming out of a stock market crash in the best possible shape.

The UK’s best fund managers — the Terry Smiths and Nick Trains of this world — tend to favour these kinds of companies because they offer reliable long-term ways to gain. Either through steady share price appreciation or through gently increasing dividends, or both.

Johnson Mathey (LSE:JMAT) is a specialist chemicals company. It’s one of those ones that has been far too expensive to buy in previous years. But now after the stock market crash it’s at an attractive price-to-earnings of 8. That makes these very cheap FTSE 100 shares in my book.

Johnson Mathey pays a 4.2% dividend at the moment, which I think will continue to grow in future. It has, very steadily, been growing its dividends per share. Management are extremely careful about cash preservation. In 2017 it paid 75p per share for just a 2.4% yield. The year after, 80p, and in 2019, 85p. All with hefty dividend cover of 2.6 times earnings or more.

Overall profits leapt from £320m to £448m in the past two years.

In terms of products, it makes steady revenue from chemical agents like absorbents and additives, medical device components, surface coatings, and emission control technologies.

But the best prospects for really big gains in the future come from its alternative renewable fuels and battery metals divisions. It is working on ultra-high energy density cathode materials. These will power the rapid growth in electric vehicle and battery technologies. The growth in the sector is slated to come not just from consumer cars but service vehicles in municipal fleets, aircraft, and military vehicles.

For investors seeking truly long-term cheap FTSE 100 shares, I think this one is a no-brainer.

Dig deeper

Minerals and mining giant Anglo American (LSE: AAL) might be best recognised as the company that bought out the Woodsmith polyhalite mining project once run by disgraced Sirius Minerals. But it has operations all over the world. In copper mining, in diamonds, in South Africa, in Botswana – it is hugely diversified.

And these are cheap FTSE 100 shares, that’s for sure. They come with a price tag that’s more affordable than they have been for years. The P/E ratio right now is just 6, while the company boasts a healthy dividend yield of 5.6%.

CEO Mark Cutifani has said that “most of our sites around the world are continuing to operate“, in response to Covid-19. And making £500m of cost savings and spending $1bn less on its 2020 programme gives the company a “robust” liquidity position of $14.5bn.

Its net debt may put some investors off, but it has been steadily reducing its leverage in the last five years and it looks very buyable to me.

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Tom Rodgers has no position in 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.