Barclays (LSE: BARC) shares made a habit of outpacing the FTSE 100 last year, and they’ve just done it again.

Over the last 12 months, the Barclays share price has skyrocketed 111%. Only British Airways owner IAG has done better.

At some point, the momentum has to stall. But not yet. The stock has jumped another 15% in the last month. The FTSE 100 has done well in that time, rising 5.45%. Yet Barclays delivered almost triple the return.

Can this winner continue to fly?

If an investor had put £10,000 in Barclays shares a month ago, they’d now have around £11,500. That’s a pretty solid return for a bank many had written off as a serial underperformer. So what’s been driving it?

February 2024 marked a turning point when CEO CS Venkatakrishnan launched an ambitious strategic overhaul, making the high-performing UK retail division the focal point of his growth strategy.

He also snapped up Tesco’s banking arm for £600m and launched a £2bn efficiency drive. Investors woke up.

FTSE banks have also benefitted from higher interests rates. These allow them to widen net interest margins, the difference between what they charge borrowers and pay savers.

That benefit was expected to reverse last year, with the Bank of England (BoE) expected to cut base rates five or six times in 2024. Instead, we got just a couple.

This allowed the banks to unwind their interest rate hedges in a measured way. Last year probably handed Barclays the best of all possible worlds. Especially since it largely bypassed the motor finance mis-selling scandal.

Can its good fortune continue? I’m wary. The UK economy looks sticky to me. A recession can’t be ruled out. That could force the BoE to cut rates faster than currently expected, squeezing margins.

On the plus side, lower interest rates should revive the housing market, pushing up demand for mortgages.

Barclays shares still look decent value. The price-to-earnings ratio has climbed from around seven times earnings to almost 12 times. That’s a big jump. But with earnings per share forecast to grow 12.8%, it’s not excessive. The price-to-book ratio remains a modest 0.6, suggesting the valuation is still grounded in reality.

Good value, decent yield

Another downside of the rally is that Barclays’ dividend yield has fallen to 2.6%, although that’s expected to nudge up to 3% over the next year. It’s covered 4.5 times by earnings, so watch out for extra shareholder rewards.

Barclays is a FTSE rarity as it has maintained its investment banking side. With Donald Trump in the saddle, volatility looks to be baked in. That could boost activity and fees.

The 18 analysts offering one-year share price forecasts have produced a median target of just over 322p. That’s an increase of just under 6%. Combined with the expected dividend yield, this would deliver a total return of under 10% if true. After the recent surge, a period of consolidation might be on the cards. This may be one to consider at the moment but perhaps not for anyone seeking a repeat of its outperformance.

The post £10,000 invested in Barclays shares 1 month ago is now worth… appeared first on The Motley Fool UK.

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• By April 2027, £2,630 invested in Barclays shares could be worth…
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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays 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.

I’m on the hunt for cheap shares and happy to get help wherever I can, even if that means calling in the robots. So I asked AI chatbot ChatGPT for its views.

Of course, I know it doesn’t really have a view. It just culls information from the internet. Although in that respect it isn’t so different from the rest of us.

I didn’t see its first stock pick coming. I thought it would choose a couple of FTSE 100 companies whose shares had plunged in 2024 and were dirt cheap as a result. Instead, it came up with Barclays (LSE: BARC). It’s been one of the best performers of all, with the shares up 80% over the last year.

The shares aren’t as cheap as the bot thinks

This highlights a risk of relying on ChatGPT. It based its recommendation on Barclays’ price-to-earnings (P/E) ratio for 2023, which was a lowly 5.1. After the recent surge, it’s now up to 9.5. Investors beware.

However, that’s still comfortably below the FTSE 100 average P/E of around 15 times. And Barclays currently has a modest price-to-book ratio of just 0.5. That’s half the figure of 1 seen as fair value.

It also boasts a diversified revenue stream across retail and investment banking, which includes exposure to the thriving US market. “This provides some resilience against sector-specific downturns”, ChatGPT tells me. 

It’s actually quoting a Motley Fool article there. An old one. ChatGPT’s other ‘insights’ are just blether about the financial services sector being regulated and competitive. So what do I think?

Barclays is a brilliant long-term buy and hold. But after its strong run I don’t think this is the time to buy. The yield’s now down to 3%. I hold Lloyds Banking Group whose shares rose ‘just’ 20% last year. But with a P/E of 7.1 and forward yield of 6%, I think it’s the better pick. I’m only human though, and could be wrong.

ChatGPT’s second stock pick is cheap by anybody standards, oil giant BP (LSE:BP). So cheap in fact that I bought its shares on 14 January at a P/E of just 5.9 times.

I decided BP was an unmissable bargain

The BP share price has been highly volatile in recent years, mostly down to oil price movements. It rocketed after Vladimir Putin invaded Ukraine in 2022, triggering the energy shock, then fell as the West secured other supplies of energy.

Today, Brent crude’s back above $80 a barrel following the Biden administration’s 11th-hour sanctions on Russia, chilly temperatures across the Atlantic and inflation fears.

Markets are watching President-elect Donald Trump closely. He wants the US to get drilling, which should increase supply. Yet Goldman Sachs has warned strict sanctions on Iran could send Brent towards $90. Plus we’re all wondering what OPEC+ might do next.

I’m looking beyond the short-term noise – particularly voluble in the energy sector – and treating BP as a long-term stock to buy and forget. Now looks like a great entry point. Especially with that bumper 5.3% trailing yield and potential share buybacks.

ChatGPT also informs me that “BP must navigate the complexities of the energy sector’s transition and commodity market volatility”, and that’s a fair point. 

The post I asked ChatGPT to name 2 cheap shares to beat the FTSE in 2025. Its first pick astonished me appeared first on The Motley Fool UK.

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Harvey Jones has positions in Bp P.l.c. and Lloyds Banking Group Plc. The Motley Fool UK has recommended Barclays Plc and Lloyds Banking Group 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.

With inflation floating around levels not seen for decades, naturally I’m on the hunt for quality value stocks that can generate some healthy returns in the long run.

There’s a variety of stocks that fit this bill across a host of sectors. And given current market conditions, I think there are plenty of opportunities presenting themselves.

But right now, my choice is Barclays (LSE: BARC).

A rough patch for banking

It’s safe to say this year hasn’t seen a top performance for the financial sector and banking stocks.

Inflation has weighed down on market confidence, while aggressive rate hiking cycles and events such as the collapse of Silicon Valley Bank and its implications have investors spooked.

With all the above combining, now may be deemed a bad time for investors to dip their toes into the market and, more specifically, banking stocks. But I’m taking a contrarian view.

Barclays’ positives

There are plenty of reasons I’m keen on Barclays. Let’s start with its valuation. As I write, the stock trades on a price-to-earnings ratio of just 4. This seems seriously undervalued. And compared to the FTSE 100 average, which is around three times the figure, this is reinforced.

To add to this, its price-to-book ratio, which measures how the market values a company compared to the value of its assets, is around 0.4. This again signifies the stock is massively discounted.

Moreover, Barclays stock offers a sizeable dividend yield that could tie me over for the time being, should the financial sector continue to experience volatility. Rewarding investors with a yield of around 5.3%, I could put my money to work to fight back against red-hot inflation rates.

Its recent half-year results saw the interim dividend hiked 20%. The firm further announced a new share buyback scheme totalling £750m, a 50% rise from the same period the year prior.

Of course, there’s always the risk that dividends may be cut at any moment. And judging by the current volatility, this is clearly a threat. However, with its dividend well covered by earnings, I’m confident of a payout.

Global presence

Granted, Barclays isn’t the only banking stock I have my eye on at the moment. But there are a few other characteristics that make it stand out.

For example, I like its diversification and its global presence, with operations in over 40 countries. And it has expertise in areas from retail to investment banking. This arguably gives it an edge over some of its competitors.

The risks

While its global diversification is a bonus, it does have some drawbacks. Namely, this relates to Barclays’ US operations and the volatility we’ve seen across the pond with its investment arm.

On top of this, we’ve already seen the impact defaults have had on banks. And with rates expected to continue rising this year and potentially beyond, further damage could be seen.

My move

The short-term outlook for Barclays is a rather bleak one. But as legendary investor Warren Buffett once said: “Be greedy when others are fearful.”

On top of its low valuation and sizeable yield, I think Barclays is well-positioned to succeed in the long run. If I had the cash, I’d snap up some shares.

The post Here’s one value stock I’d snap up today! appeared first on The Motley Fool UK.

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Charlie Keough has positions in Barclays Plc. The Motley Fool UK has recommended Barclays 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.

The FTSE 100 has performed better than most global stock markets this year, but it has still fallen sharply. Trading at just over 6,900, it is down almost 8% in 2022.

This has been a tough year. The global economy had barely started to recover from the pandemic, when Putin invaded Ukraine.

Energy prices have rocketed, while inflation is in double digits. The era of cheap money has hit an abrupt close, as stimulus goes into reverse. All the froth has gone out of stock markets, and house prices may soon start falling.

The FTSE 100 has done okay

The UK is in crisis, after former chancellor Kwasi Kwarteng’s mini-budget undermined the pound and the nation’s pension funds. As far as the FTSE 100 is concerned, the only surprise to me is that it has not fallen further.

I’ve no idea whether we will see another sell-off. I never predict stock market movements, for the simple reason that it is not possible to do so with any consistent degree of success.

Instead, I aim to take advantage of market movements after they have happened. At least there I’m on solid ground. The FTSE 100 has dropped this year, therefore my favourite companies are cheaper. If I buy them today, I’m getting a relative bargain.

Naturally, the lead index could drop again, making them cheaper still. If that happens, I will console myself with the fact that my reinvested dividends will pick up more stock at the lower price.

I will further console myself by investing a little more, at the lower price. That’s how I invest. By feeding any spare money I have into the market, taking advantage of any dips.

There are so many bargain stocks on the FTSE 100 right now, I hardly know where to start. Many individual stocks have fallen much further than the index as a whole. For example, private equity firm Intermediate Capital Group is down 51% over 12 months, and now trades at a bargain 5.5 times earnings. It yields a thumping 7.67%.

I’m amazed by how cheap stocks are

Many other FTSE 100 stocks have a similar profile. Barclays is down 24% in the last turbulent year. It trades at just 3.93 times earnings and yields 4.16%. British Land is down 30%. It’s valued at just 3.38 times earnings and pays income of 6.43%.

I would need to do more research before actually buying them, but their low valuations and high yields are incredibly tempting. There are loads more like them on the FTSE 100. This is a great time to buy dirt-cheap dividend stocks.

The big risk when buying companies is that I may be walking into a value trap. Especially now, as inflation powers upwards and consumers and businesses face the worst cost squeeze in four decades. I expect things to get worse rather than better, but I also remind myself that stock markets typically recover long before the actual economy does.

If I waited for happier times to buy FTSE 100 shares, they would cost me a lot more than they do today, and yield far less.

The post The FTSE 100 has fallen 8% this year! I’m going shopping for shares appeared first on The Motley Fool UK.

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Harvey Jones doesn’t hold any of the shares mentioned in this article. The Motley Fool UK has recommended British Land Co. 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.

If I had as much as £10,000 to pump into a Stocks and Shares ISA right now I’d be looking to load up on top FTSE 100 dividend shares.

After years of trailing major indices such as the S&P 500, London’s blue-chip index is showing it’s made for tough times. US tech stocks may have cashed in on the cheap money era, but FTSE 100 shares now offer bruised investors a welcome safety net.

Investing goes in cycles and the tech splurge lasted beyond its natural term. That came as central bankers piled on the stimulus during the Covid crisis. Now investors are prioritising ‘value’ stocks, dividend-paying companies trading at low valuations. 

My ISA line-up

The FTSE 100 is full of them and I’d start by exploring these 10 companies. All have risks, but offer big opportunities too.

Insurer Aviva has delivered little share price growth in recent years. But it’s a dividend aristocrat paying income of 9.95%. Trading at a dirt-cheap 6.8 times earnings, it’s hard to resist.

Barclays is even cheaper at just 3.7 times earnings, while yielding 4.28%. Sticking with financials, I also like Lloyds Banking Group, cheap at 5.5 times earnings with a 4.82% yield (and future dividend growth).

The financials sector is being shaken by the gilt crisis, while rising interest rates could squeeze both small business and retail customers. But I reckon those risks are reflected in their rock-bottom valuations.

I’d also include transmissions giant National Grid. Frankly, this is a stock I’d buy at any time, as a core portfolio holding. Today it yields 5.77% and looks fair value at 14.4 times earnings. It’s a solid long-term buy and hold for my ISA.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Higher yields

With that as security, I’d take a bigger punt and buy a housebuilder such as Persimmon that yields a ridiculous 19.37%. Although I expect the dividend to be cut sooner rather than later, that won’t be a disaster given today’s starting point. House price crash fears are priced in at a valuation of 4.9 times earnings. At least, I hope they are.

Mining giant Rio Tinto is the second highest yielder on the FTSE 100 offering 14.21% and trading at 4.2 times earnings. Chinese demand for commodities is slowing and the dividend may be reduced at some point. Now still looks like a great entry point for contrarians like me. I’d also consider gold miner Fresnillo. It may benefit when inflation easies, the US dollar softens and the gold price recovers.

Clothing retailer Next will obviously suffer as discretionary consumer spending falls. But it looks better placed than most, and I’d consider it for my ISA too. Then I’d buy Unilever, because I’ve never seen it this cheap at 17.2 times earnings (it’s usually around 24 times) while yielding 4.42%.

Finally, I’d include spirits giant Diageo in my top 10. Yes, it looks expensive trading at 24.1 times earnings while the yield is just 2.08%.But it’s a solid, recession-proof business and they come at a premium in these troubled times.

The post How I’d invest £10k in a Stocks and Shares ISA today appeared first on The Motley Fool UK.

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Harvey Jones doesn’t hold any of the shares mentioned in this article. The Motley Fool UK has recommended Barclays, Diageo, Lloyds Banking Group 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.

This week’s meltdown has put yet another nail in the coffin of buy-to-let, which now looks like a costly way of generating passive income in retirement. I have favoured shares for some time, and this only confirms my view.

Buy-to-let was once a glorious investment, as property prices and rental income rolled ever higher. It has slowly been destroyed by higher taxes, reduced allowances, tougher regulations, and now rising interest rates.

I’m buying stocks for passive income

Stock markets have also taken a beating this year, but they still look like a far better way of building a steady stream of passive income to me.

A portfolio of shares seems much easier to manage than a buy-to-let property. I can buy and sell shares in seconds, take all my returns free of tax inside a Stocks and Shares ISA, then basically ignore them, if I choose. By contrast, buying property takes months, has high upfront and ongoing costs, and involves a lot of bother in finding tenants, completing tax returns, and paying tax to HMRC.

I wouldn’t buy a property right now even if I could get a mortgage, but I am happy to go hunting for bargain UK shares. The FTSE 100 has fallen this year, by 8.73%. That means I can buy top companies on the index at low prices.

Barclays now trades at just four times earnings and yields 3.97%. Tobacco maker Imperial Brands Group trades at 7.6 times earnings and yields 7.37%. Mining giant Rio Tinto is valued at just four times earnings, and its yield is a staggering 15.08%.

The FTSE 100 can even give me exposure to the property market through a housebuilder such as Barratt Developments. It trades at 4.5 times earnings and would give me a passive income of 9.95% a year. 

Tax-free returns inside a Stocks and Shares ISA

Of course, buy-to-let could bounce back. If house prices fall sharply, there could be some real bargains around. Mortgage rates may only see a temporary spike. Good property is still in short supply, and that drives tenant demand.

Shares can be risky. Global markets are in meltdown right now. Dividends can be cut, at any time. Profits could fall, and share prices follow. 

Barratt, as a house builder, is exposed to a house price crash. Its share price is down 11.51% in the last week alone. Over five years, it has fallen 38.93%. If the Bank of England hikes interest rates to 6% as many predict, demand for new builds will fall because buyers will no longer be able to afford them.

Yet I think UK shares are a much better way to build the passive income I’m after. My strategy would be to buy them at today’s dirt-cheap prices, and hold them for years and years.

I will build a balanced blend of a dozen FTSE 100 stocks or so, to spread my risk. When I retire, the passive income they pay will underpin my pensions. It all seems a lot more straightforward than buy-to-let.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

The post Buy-to-let is in trouble so I’ll generate passive income from shares instead appeared first on The Motley Fool UK.

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• £5,000 invested in Greggs shares 2 years ago is now worth…

Harvey Jones doesn’t hold any of the shares mentioned in this article. The Motley Fool UK has recommended Imperial Brands. 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.

Yesterday, the Bank of England announced it was hiking interest rates again, this time by 0.5%, the largest jump in over a quarter of a decade. The rise came after the months of red-hot inflation, which reached record highs of 12.7% in June, fuelling the cost-of-living crisis. The FTSE 100 dropped 0.77% on the news.

The Bank also warned that the UK could be headed towards a long recession, inflation could creep past 13%, and the UK economy would contract by a sizable 2.1% by the end of 2023. This all sounds pretty scary, but I’m using it as a chance to buy more shares in the stock market at bargain prices. Let’s take a closer look why.

The story so far

The UK economy has been seeing rising inflation for months now. Initially caused by the fiscal stimulus and supply bottlenecks of Covid-19, the tragic Russia-Ukraine conflict has magnified the issue, sending energy prices through the roof.  The way that central banks control inflation is to raise interest rates. This dents spending, slowing economic growth. When rates keep rising, eventually GDP growth turns negative, and the economy slips into recession. This is what we’re seeing with the UK economy.

When interest rates rise, stocks tend to fall. This is because people have less extra cash on hand to invest in the market and because they can earn a higher ‘safe’ return on their savings (1.75% from yesterday). It also makes it harder for companies to grow, as consumers tend to buy less and it’s more expensive to raise capital. Stocks have taken a hit across the board, with the FTSE 100 down 1% year to date, and almost 2% in the last six months. Across the pond, the situation is even bleaker, with the S&P 500 falling over 13% year to date, and 6% in the last 12 months.

Why I am buying shares

Such a climate may deter investors from buying shares. However, I think now could be a great time for me to build a dirt-cheap portfolio. Stock prices have taken a hit across the board, yet not a lot has actually changed within companies. This means I can buy some quality companies, at discounted prices.

The FTSE 100 average price-to-earnings (P/E) ratio is currently sitting at 14. A year ago, this figure was much higher, around the 22 mark. Even before the pandemic, the average P/E ratio was around 17. Quality UK stocks like BT, Lloyds, and Barclays are all trading comfortably below 14, looking like bargains to me. As stock prices fall, dividend yields rise, which is also good news.

Therefore, I’m currently on the hunt for undervalued companies to add to my portfolio. While some may be panicking about a recession, I’m using this time to grab cheap shares for long-term growth.

The post Recession is looming — is it time to invest in the stock market? appeared first on The Motley Fool UK.

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Dylan Hood has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group and Barclays. 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.

Earnings results are a great way for investors to judge a company. They’re used to determine whether companies are on track with their initial guidance. These results can often radically move share prices in either direction, depending on the numbers reported. So, here’s an earnings preview for three FTSE firms reporting results this week.

The usual approach is to compare firms’ new numbers to those from prior years. But certain revenue figures may have been impacted by the pandemic, so it’s important to get context from pre-pandemic levels too. It can also be useful to consider whether a company can perform better than its previous year’s numbers, or if it can beat analysts’ annual forecasts. Analysts in the UK don’t always publish earnings previews for quarterly or half-year periods, but given their popularity, the shares covered below are exceptions. All of them have financial years that end in December.

Rio Tinto (H1 Earnings)

Rio Tinto (LSE: RIO) is an Anglo-Australian multinational company. It’s the world’s second-largest metals and mining corporation. The FTSE 100 firm’s main export is iron ore. Rio is set to reveal its H1 numbers for its six months performance ending June on 27 July.

Its earnings preview seems to indicate a slowdown in both its top and bottom lines. This is most likely due to the perpetual lockdowns in China that have been limiting construction activity. China is the group’s biggest customer, hence the gloomy forecasts. That being said, a sudden change in health policy in China could see Rio edge closer to its FY21 figures and could spell a healthy jump in its stock.

Barclays (Q2 Trading Update)

Barclays (LSE: BARC) is one of the UK’s biggest banks. It operates in many countries across the globe, and also operates an investment banking division. The bank is expected to disclose its Q2 figures for its three-month performance ending June on 28 July.

Analysts covering Barclays are expecting the bank to improve on its total income marginally this half, on a year-on-year basis. However, its most recent earnings per share estimate has been downgraded from 7.6p in the last week. The increase to its top line is most likely due to the effects of higher interest rates. Nonetheless, a decrease in investment banking activity from the current bear market is going to cause its bottom line to suffer. But if the dual-listed stock surprises investors with better than expected figures, a rally could be a possibility.

NatWest (H1 Earnings)

NatWest (LSE: NWG) is another UK bank reporting results this week. The group operates a wide variety of banking brands, offering personal and business banking, private banking, insurance, and corporate finance. It’s scheduled to unveil its H1 earnings for its six months performance ending June on 29 July.

Just as is the case with its sector peer, analysts are expecting the same trend. Alongside that, investors in its shares and the wider stock market will be paying attention to its remediation figure and number of late-stage loans to determine whether the UK is heading for a recession. The former is essentially the amount of money allocated as a buffer to cover potential defaults from customers.

The post Earnings preview: Rio Tinto, Barclays, NatWest appeared first on The Motley Fool UK.

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John Choong has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays. 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.

Stock markets are continuing their volatile trend throughout 2022. I’m looking to reduce my exposure to unpredictable price changes by boosting my passive income. These two UK dividend shares offer impressive yields and strong underlying fundamentals.

Legal & General

Legal & General (LSE:LGEN) shares have been on a downwards trend in 2022. Shares are down 15% year-to-date as stock markets have slid. As dividend yields are dependent on the share price, this slash in value has made the company even more appealing to me. The dividend yield has now risen to around 7%.

Alongside all of this, I consider L&G to be in a strong position to maintain dividend payments over the forthcoming years. Currently, a comfortable 54% of total earnings are paid out to shareholders. With 46% of earnings going back into the operating of the business, this shows that the company is not overstretching any finances to pay shareholders.

The financial services giant reported profits of £2.05bn for 2021, which was an increase of 28% from the year before. This record profit has put L&G shares trading with a price-to-earnings ratio of 7.6. This is considerably less than the average FTSE 100 P/E ratio of 15.

Despite this, some risks need to be considered. Legal & General has over £1trn in assets under management making it one of the UK’s leading investors. As shares have had a rough start to the year, customers will likely start withdrawing their investments, which will harm future profits for the company.

A FTSE 100 bank

Barclays (LSE:BARC) is another FTSE 100 dividend share that has had a rough start to the year. Barclays shares are down nearly 20% in 2022. This has pushed the dividend yield up to 5% with this expected to rise even further in coming years. Forecasts suggest that the dividend yield will rise to 6.5% by 2024.

Barclays only pays out 17% of total earnings to shareholders. This shows that, while the company is committed to delivering a dividend, it will not sacrifice the strength of the company to provide unsustainable payouts to shareholders.

Back in Q1, Barclays reported a rise in earnings of 10% to £6.5bn which was led by an impressive performance from the corporate and investment bank division. Alongside this, strong 2021 results have left Barclays with a P/E ratio of just 4.5, which is incredibly low.

There are some concerns about the future that I am acknowledging. If the economy is pushed into a recession, there will likely be an increase in debt defaults which will increase costs rapidly. Demand for the bank’s investment services will also fall as clients shift away from high market exposure.

Overall, both these dividend shares face several challenges in the upcoming year. However, I believe that they remain in a good position to pay out a consistent dividend and tackle forthcoming uncertainty. As a result, with my next chunk of savings, I am adding to my existing position in Legal and General and opening a new one in Barclays.

The post 2 UK dividend shares I’m buying to hold through volatile times! appeared first on The Motley Fool UK.

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Finlay Blair holds shares in Legal and General Group PLC. The Motley Fool UK has recommended Barclays. 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.

With the Barclays (LSE:BARC) share price down 12.8% in the past year, could rising interest rates and low price-to-earnings (P/E) ratios make now a good time to add this company to my long-term portfolio? Let’s take a closer look.

Rising interest rates

Barclays is an investment and retail bank operating on a global scale. It is one of the major players in the sector, along with the likes of Lloyds and HSBC. Interest rates are understandably incredibly important to such a business because they largely determine how much it can charge for customers to borrow money.

This borrowing could take the form of straightforward loans or mortgages. The Bank of England has already raised interest rates from 1% to 1.25% and has stated that further hikes are likely in the near future.

This could be good news for Barclays shares, because its profit margins on the borrowing products it sells could increase over the long term.

What’s more, housebuilders like Taylor Wimpey and Persimmon have recently said that they don’t yet see a slowdown in the housing market.

But might this only be a matter of time? With inflation, surging energy costs, and rising interest rates, many potential customers have less money in their pockets for deposits on new homes so may be less likely to take out a new mortgage. 

In addition, the worsening economic climate may deter people from taking out other loans that they may not be able to repay further down the line. All these factors indicate that Barclays could have a bumpy road ahead. 

Recent results and low P/E ratios

A look at the company’s financial results, however, paints a slightly more positive picture. For the first three months of 2022, income rose by 10% to £6.5bn compared to the same period in 2021. 

Despite this, pre-tax profit fell by 7%. But this was largely due to charges incurred for the company issuing too many bonds in the US. The penalty was $500m

The business has initiated a £1bn share buyback scheme, although it has pushed it back to the second quarter of this year.

The share price may also be cheap when looking at P/E ratios. Barclays registers a trailing P/E ratio of 4.03 and a forward P/E ratio (found by dividing the share price by forecast earnings) of 5.4.

These are markedly lower than the P/E ratios of two major competitors, Standard Chartered and Lloyds.

Although P/E ratios are only one part of my analysis of a company, in this instance they suggest that I would be getting a bargain if I bought shares in Barclays soon.

Overall, this business isn’t without its troubles. The broader economic climate is concerning to me, especially given the potential impact on Barclays. On the other hand, the potential cheapness of the share price is attractive to me. Yet it’s not quite cheap enough in the current environment. I will hold off buying shares in the firm until I see an improvement in the economic outlook, but I won’t rule out a purchase at some future date.

The post At 157p, is the Barclays share price now too low to miss? appeared first on The Motley Fool UK.

More reading

• Why the next 4 weeks are going to be big for Barclays shares
• Barclays shares surge: stick or twist?
• Could the SpaceX IPO make Barclays shares this year’s top FTSE 100 idea?
• By April 2027, £2,630 invested in Barclays shares could be worth…
• I hold Lloyds. Is it madness to buy Barclays shares too?

Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays, HSBC Holdings, Lloyds Banking Group, and Standard Chartered. 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.