I think recent market volatility provides a great opportunity for me to buy some brilliant shares at bargain prices. Here are three dividend stocks I’m thinking of buying following recent price falls.
Vistry Group
Dividend yield: 8.5%
Frantic action by the Bank of England (BoE) poses a threat to housebuilders like Vistry Group (LSE: VTY). This week, the BoE raised interest rates for a fifth straight month and vowed to “act forcefully” if inflation keeps growing.
This poses a threat to the housing market by putting buyer affordability under pressure. That said, it’s hard to ignore the resilience of the homebuilders despite recent interest rate rises. Crest Nicholson actually raised its earnings guidance earlier this week.
It’s my opinion too that the rock-bottom valuations of firms like Vistry more than reflect the danger posed by rate rises. This developer trades on a price-to-earnings (P/E) ratio of just 6.1 times.
Most recent financials from the FTSE 250 business showed its average private sales rate up 15% between 1 January and 18 May. I expect its newbuild properties to continue selling well, given the massive shortage of available homes entering the market.
Taylor Wimpey
Dividend yield: 7.5%
For the same reason I’m considering increasing by holding in Taylor Wimpey following recent share price weakness. As well as a large dividend yield, the housebuilder trades on a P/E multiple of just 6.4 times.
I’ve enjoyed some fat dividends from the FTSE 100 business down the years. Companies like this are highly cash generative and recent trading here suggests I might continue to receive a healthy passive income. Its order book stood at a handsome £3bn as of 17 April.
Rising interest rates and growing building costs are a danger to Taylor Wimpey and Vistry. But, in my opinion, the possible rewards on offer from these shares outweigh the risks.
TBC Bank Group
Dividend yield: 8.8%
Investing in cyclical shares like TBC Bank Group (LSE: TBCG) could be extra risky for me as the economic landscape deteriorates. This has the potential to strike revenues hard and push up loan impairments.
On the plus side, interest rates are also rising rapidly in Georgia. This is good for bank profits because it raises the margin between the interest rate paid to savers and applied to borrowers. Rate increases will help reduce the impact of worsening economic conditions on TBC’s profits.
I like this FTSE 250 share as it gives me exposure to a fast-growing emerging economy. Georgian GDP was rising at an average rate of 4% a year between 2011 and 2021, according to the World Bank.
TBC offers excellent all-round value today as it also trades on a P/E ratio of just 3.3 times for 2022. I also like the fact that the predicted dividend is covered 3.4 times by anticipated earnings. This gives a wide margin of safety in case profits come in less than expected.
