I’m compiling a list of the best value FTSE 100 and FTSE 250 dividend stocks to buy for my Stocks and Shares ISA. I’m searching for companies that trade on rock-bottom price-to-earnings (P/E) ratios and offer large dividend yields to.
At the top of my list are banking giant HSBC Holdings (LSE:HSBA) and broadcaster ITV (LSE:ITV). As the table below shows, each offers exceptional all-round value for money based on current broker forecasts.
| Company | Forward P/E ratio | Forward dividend yield |
|---|---|---|
| HSBC Holdings | 6.3 times | 10.1% |
| ITV | 7.1 times | 8% |
Here’s why I’m looking to buy them when I next have cash to invest.
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HSBC
Asian banking colossus HSBC faces further stress in 2024 as China’s economy struggles for traction. Like many financial services providers in the region, it is particularly vulnerable given troubles in the country’s property sector.
Yet I believe that P/E ratio of around six times more than reflects this danger to group earnings. Indeed, I’m tempted to buy HSBC shares as the long-term outlook for the banking industry in its emerging markets remains very attractive.
Analysts at Precedence Research note that Asia had the largest share of the global retail banking market in 2022, at 34%. And they predict that the market will “continue to grow at a significant rate” in the following decade, thanks to steady population growth and rising disposable income in the middle classes.
Its sprawling presence and exceptional brand power give HSBC an exceptional chance to build revenues in this landscape. And it is investing massive sums in its retail, corporate and investment banking units to give sales growth an extra boost.
The FTSE 100 firm has pledged to invest $6bn in China, Hong Kong and Singapore to deliver “double-digit growth in profit” from its Asian operations. And it is likely to continue splashing the cash in the region, helped by further asset sales in its other territories.
ITV
There’s no shortage of streaming platforms vying for our business today. In fact the number of services has ballooned since the pandemic, and streaming companies are spending fortunes to stand out. Netflix‘s gigantic $5bn content deal with wrestling powerhouse WWE in January underlines how lucrative programme production can be.
I think ITV could be a great way to capitalise on this booming demand for content. Through its ITV Studios production arm it makes and sells some of the world’s most popular scripted and non-scripted shows like The Voice, Love Island, Vigil and Snowpiercer.
The FTSE 250 broadcaster has spent vast sums to turn the division into a global production powerhouse. It currently has 60 different separate production companies in its stable spanning 13 countries, and impressively sales here are growing ahead of the broader market (up 9% in nine months to September 2023).
I also like ITV because of the impressive growth of its own ITVX streaming platform. Thanks in large part to its beloved content, streaming hours on the service leapt 27% year on year between January and September.
Like HSBC, I think this former FTSE 100 stock is trading far too cheaply at current prices. I think it could be a brilliant buy for both growth and income investors.
