£1,000 to invest? 2 cheap FTSE 100 shares with BIG dividends to buy now

The recent bearishness washing across global stock markets provides an excellent dip-buying opportunity for me, I feel. Here are two dirt-cheap FTSE 100 shares I’d spend £1,000 on each today.

A FTSE 100 faller that I own

Packaging manufacturer DS Smith (LSE: SMDS) is a highly cyclical share. So it’s perhaps no surprise that concerns over rampant inflation and a possible collapse of the economic recovery have sunk its share price of late. The FTSE 100 firm has dropped 13% in value since the beginning of September.

Yet I feel this drop leaves DS Smith trading in bargain-basement territory. The boxmaker trades on a forward PEG ratio of just 0.5. A reminder that a reading below 1 suggests a stock could be undervalued by the market. Furthermore, DS Smith packs a meaty corresponding 3.9% dividend yield, better than the FTSE 100 3.4% average.

I don’t deny that it could face significant turbulence in the short-to-medium term. But I think the company remains a terrific buy for the long term. Demand for its packaging should soar as e-commerce continues to grow, an area in which it has invested heavily in recent years. Its increasing focus on environmentally-friendly products should help it to capitalise on the so-called green revolution too. And finally, the FTSE 100 firm has plenty of liquidity to continue executing shrewd acquisitions, a realm in which it has had success over many years. I’m thinking of raising my stake in the Footsie business at current prices.

7.3% dividend yields

Concerns over supply chain problems and a subsequent jump in building costs have hit homebuilding stocks in recent weeks. The problem of materials shortages is so bad, in fact, that the head of the Chartered Institute of Procurement and Supply has described government plans to create 300,000 new homes a year as “almost impossible”.

The prospect of quicker-than-predicted Bank of England rate hikes has added to the recent gloom too. But are these dangers now baked into the share prices of FTSE 100-listed The Berkeley Group (LSE: BKG)? I think they may be. This cheap UK share has also fallen 13% in value since the beginning of September. It now trades on a forward P/E ratio of around 11 times and carries an enormous 7.3% dividend yield.

I buy shares based on what returns I can expect over a long-term horizon, say a decade or more. And I believe Berkeley is an attractive buy on this basis, and particularly at current prices, even with the risks the sector faces. I like this housebuilder’s focus on London, one of the most popular cities for people to live, and the more economically-resilient South East of England. I also believe homebuyer demand across the country should continue to outstrip supply for years into the future as low interest rates, generous mortgage products, and government support for first-time buyers all appear here to stay.

Like DS Smith, I think Berekeley is a great FTSE 100 share to buy following recent share price weakness.

Royston Wild owns shares of DS Smith. The Motley Fool UK has recommended DS Smith. 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.