I’m very specific with what I’m looking for from the stock market. I apply different screening filters for stocks all the time. At the moment, I’m on the hunt for dividend shares with a yield above the FTSE 250 and FTSE 100 average. At the same time, I’m looking for ideas with a share price below £2. Here’s what I’ve found.
It’s all about ME
The first stock is ME Group International (LSE:MEGP). The FTSE 250 firm’s known for its automated photo-booths, printing kiosks and other vending solutions. At the moment the stock trades at 180p and has a dividend yield of 4.33%.
It’s not just the income side that’s appealing to me. Over the past year, the share price has jumped by 8%.
Part of the increase in the dividend and the share price relates to the strong performance from 2023. The report hailed “a year of record financial performance”. This was driven by various factors. For example, it expanded abroad in Australia. Further, it launched new partnerships with Central Co-op and Morrisons.
The future looks good, with a modernisation push already under way on existing products. Even with this, the profitability shouldn’t be hindered, so dividends aren’t under threat. In terms of risks, I’d say that it needs to keep focusing on diversifying away from photo-booths and similar machines, as demand for these more traditional services could fade.
Low share price, high income
Another idea is Lloyds Banking Group (LSE:LLOY). It might take some a while to process, but the Lloyds share price is less than £1. In fact, at 58p, it has the lowest share price in the entire FTSE 100.
But there’s a big difference between having a low share price and being undervalued. A stock could trade at £1,000 and be undervalued. When it comes to the bank, the 31% rally over the past year means that, in my eyes, it’s fairly valued. However, I’m looking at this from the income side right now.
A dividend yield of 4.72% is very healthy, and it has been above 5% for most of the past year. The dividend per share payments have been increasing, from 2p in 2021 to 2.4p in 2022 and 2.76p over the last year. This is due to boosted earnings coming out of the pandemic, with higher interest rates also helping the company.
Looking forward, it’s true that interest rate cuts wont be helpful. This is a risk. However, I do think this could be offset by the positive sentiment from consumers. Lower interest rates should make them spend more, able to afford mortgages, and raise confidence to take out loans. All of this should make the bank money.
I like both stocks, and when I get some more free cash will look to allocate it to these ideas.
The post 2 dividend shares with a price below £2 and a yield above 4.3% appeared first on The Motley Fool UK.
Should you buy Lloyds Banking Group now?
Don’t make any big decisions yet.
Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.
And he believes they could bring spectacular returns over the next decade.
Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows…
When such enormous changes hit a big industry, informed investors can potentially get rich.
So, with his new report, Mark’s aiming to put more investors in this enviable position.
Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!
Grab your FREE Energy recommendation now
More reading
Which looks the better bank buy right now: Lloyds or NatWest shares?
Up 31%, do Lloyds shares have more to give?
Surely the Lloyds share price has gone too high?
At 58p, is Lloyds actually a penny stock? And is it a buy today?
At 52-week highs, here’s what may be next for the Lloyds share price
Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended 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.
