I’m on the hunt for the best cheap UK stocks to buy as 2022 clicks into gear. Here are two dividend-paying shares I’d buy today to hold for years.
A cheap stock with big dividends
Britain isn’t the only Western European nation suffering from a severe shortage of new homes. The Irish property market, for example, is also beset by an inadequate number of homes for both buyers and renters. This is what makes Irish Residential Properties (LSE: 0QT8) such an attractive share to me today.
Rents are soaring and Irish Residential Properties is expanding to make the most of these favourable market dynamics. Latest financials showed net rental income increased 5.9% year-on-year in the six months to June 2021 thanks to organic rent growth and the impact of acquisitions. Pleasingly for the Dublin firm it appears as if the supply/demand imbalance powering rent levels is set to last too. The bean counters at KPMG think rents for a one-bedroom flat in the Irish capital, for example, will rise 50% between now and 2028 to €2,500 a month.
A failure to identify decent acquisition opportunities could hit Irish Residential Properties’ long-term profits. But at current prices I still think the firm is too cheap to ignore. It trades on a forward price-to-earnings growth (PEG) ratio of 0.9. Any reading below 1 suggests that a stock could be undervalued.
On top of this, Irish Residential Properties also packs a mighty 4.3% dividend yield. This beats the broader 3.5% average for UK shares by a decent margin.
A top counter-cyclical stock
Begbies Traynor Group (LSE: BEG) also looks like one of the best stocks to buy in today’s economic climate. The insolvency specialist has a long record of yearly profits growth behind it, a result of the company’s ongoing (and ambitious) acquisition strategy. I’m tipping earnings to continue rising strongly as Britain’s economy worsens.
Unfortunately insolvencies are rising fast as inflationary pressures increase and the end of financial support from furlough schemes bites. The Insolvency Service says that the there were 1,560 corporate insolvencies in January, up from 1,488 in December. January’s number was also more than double that recorded in January 2021.
Recent trading updates from Begbies Traynor’s services also illustrate the increasing turbulence facing British firms. Revenues soared 39% in the six months to October, latest financials showed. Encouragingly the company has continued to build the business to capitalise on this fertile environment. In January it snapped up Daniells Harrison Surveyors for a fee that could rise to £2m.
It’s true that Begbies Traynor operates in a highly-regulated environment. This means profits could suffer badly if new laws come into effect. But at current prices I still think it’s an attractive UK share to buy today. It trades on a forward PEG ratio of just 0.5. A 2.8% dividend yield meanwhile offers an extra sweetener for an investor like me.
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.
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