2 dirt-cheap UK dividend stocks to buy for 2022

I’m searching for the best dividend-paying, cheap UK shares to buy right now. Here are two bargains on my shopping list.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I think now’s a great time to go shopping for cheap UK stocks. The London Stock Exchange is packed with companies that can provide excellent shareholder returns regardless of broader economic conditions. This is why I have continued investing in UK plc despite problems like runaway inflation and the ongoing Covid-19 crisis.

Now is a particularly great time to go shopping for bargain lovers like me. The underperformance of British stocks versus their European and US counterparts in recent times provides an excellent buying opportunity. Here are two dirt-cheap UK shares I’m considering buying for my Stocks and Shares ISA right now.

Looking good

I believe that Lookers (LSE: LOOK) shares could be too cheap for me to miss. As well as trading on a forward price-to-earnings (P/E) ratio of 5.6 times, the retailer carries a meaty 4.1% yield for 2022.

I think the stratospheric rate at which electric vehicles are selling in Britain provides outstanding opportunities for Lookers. Sales of battery-powered and hybrid vehicles rocketed 17.9% year-on-year in October, the Society of Motor Manufacturers and Traders said. I expect demand to continue rocketing too as costs of producing these new-age vehicles steadily fall and concerns over the climate emergency inevitably grow.

I’m also encouraged by government plans to make it easier for EVs to be charged, a critical factor for car buyers to consider. From next year, all new homes and buildings in England will need to install EV charging points, it was announced today. It is thought this will boost the number of charging points being installed each year by 145,000.

But Lookers still faces the risk, like other car retailers, of uncertainty going into 2022 as supply chain issues continue to dent auto production. 

A cheap UK share for an economic slump

Economic conditions in Britain are becoming increasingly alarming as soaring inflation and supply chain problems persist. Just today, EY Club slashed its GDP growth forecasts for 2022 by almost a full percentage point, to 5.6%. It warned of weak, sub-2% annual growth by the middle of the decade too.

Investors like me need to consider the threats and the opportunities a deteriorating UK economy creates. I am thinking of investing in Begbies Traynor Group (LSE: BEG). I think trading here will pick up as the number of corporate casualties might unfortunately soar from 2022. This cheap UK share provides financial rescue and recovery services for companies. It is also specialist in the field of corporate insolvencies for both businesses and individuals.

Today, Begbies Traynor trades on a forward price-to-earnings growth (PEG) ratio of just 0.5. This is comfortably inside the benchmark of 1 that suggests a stock could be undervalued. Moreover, the support business carries a handy 2.3% dividend for the financial year to April 2022 too.

I’d buy Begbies Traynor even though its penchant for acquisitions creates a myriad of risks, such as disappointing profits generation at a newly-acquired business.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

More on Investing Articles

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »