I’m searching through the FTSE 100 and FTSE 250 for the best cut-price dividend shares to buy for my ISA.
I’m looking for companies that trade on forward-looking price-to-earnings (P/E) ratios below the Footsie average of 12 times. They must also carry corresponding dividend yields above the 4% index average.
Here are four I’m thinking of adding to my portfolio soon.
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Bluefield Solar Income Fund
P/E ratio: 10.6 times
Dividend yield: 7.3%
As the name suggests, this FTSE 250 company invests in renewable energy assets. This means it could generate terrific shareholder returns as the world switches from fossil fuels to cleaner sources like solar.
Bluefield Solar Income Fund owns more than 200 assets spread across almost 20 counties. This broad UK footprint — allied with its exposure to wind farms — helps to reduce risk from weather-related issues (like when the sun doesn’t shine).
Constant demand for energy makes this company a potential safe-haven buy for these uncertain times too. I’d buy it even though higher-than-usual interest rates will continue to depress its net asset values (NAVs).
Anglo American
P/E ratio: 10.2 times
Dividend yield: 4.1%
Mining stocks like Anglo American face turbulence in the near term as the global economy falters. Of most concern are the continued troubles in China, I feel, and more specifically weakness in its property and manufacturing sectors.
But the long-term outlook for this Footsie company remains robust. Rapid emerging market urbanisation, the growth of the green economy, and rising consumer electronics demand should all push industrial metals demand skywards over the next decade.
Anglo American’s broad product suite — it supplies key materials including copper, iron ore and nickel — gives it multiple opportunities to exploit this phenomenon. A diversified portfolio also reduces the risk to group profits if weakness occurs in one or two metals categories.
Tritax Eurobox
P/E ratio: 11.7 times
Dividend yield: 8%
Tough economic conditions in the eurozone pose a threat to companies across the currency union. This includes Tritax Eurobox, a property stock that owns and operates 25 warehouse and logistics hubs across major economies including Germany, Spain, Italy and Poland.
On the plus side, the FTSE 250 firm has its tenants locked into long-term contracts (its weighted average unexpired lease term sits at around eight years). This reduces vacancy risk and provides decent revenues visibility overall.
I think earnings here could rise steadily over the long term as e-commerce growth drives demand for storage and distribution assets.
Vodafone Group
P/E ratio: 10.3 times
Dividend yield: 10.4%
I think buying Vodafone Group shares could also be a good idea as its new transformation programme kicks off. Under new CEO Margherita Della Valle the company is hoping to boost earnings growth through aggressive cost-cutting and schemes like doubling-down on its Vodafone Business division.
I think now could be a good time to buy the FTSE 100 share too, following signs of a turnaround in its core German market. Companies like this play a vital role in the digital economy and so could deliver solid returns as the technological revolution clicks through the gears.
I hope to buy Vodafone shares despite current problems in its European marketplaces that could dent near-term profits.
