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As a worth and earnings investor, I’m at all times in search of under-valued shares providing beneficiant dividend yields. For me, the UK inventory market appears to be like low cost, therefore the FTSE 100 and FTSE 250 are my core searching grounds for locating good companies at honest costs.
Throughout the mid-cap FTSE 250, I discovered seven shares providing dividend yields above 10% a 12 months. Nonetheless, I are likely to avoid shares with double-digit money yields, as historical past teaches me that such excessive payouts typically get slashed in troubled occasions.
Pleasant dividends
I’m conscious of two different issues when attempting to find dividend shares. First, not all listed shares pay dividends, although most FTSE 100 shares do. Second, future dividends are usually not assured, to allow them to be minimize or cancelled at quick discover. This occurred extensively throughout the 2020/21 Covid-19 disaster.
Nonetheless, my household portfolio comprises round two dozen FTSE 350 shares held for his or her lowly valuations and/or market-beating dividends. One in all these is ITV (LSE: ITV) inventory, purchased in June 2022 for 68.7p a share. Alas, the worth efficiency since then has been considerably disappointing.
ITV shares slide
As I write, the ITV share worth stands at 67p, valuing the UK’s main terrestrial industrial broadcaster at £2.5bn. That is properly beneath the 52-week excessive of 88.9p, hit on 25 July. Over one 12 months, this inventory is down 7.2%, whereas it has dropped by 14.7% over 5 years.
Nonetheless, the above returns exclude dividends, that are very beneficiant from this FTSE 250 agency. After current worth drops, ITV shares provide a juicy money yield nearing 7.5% a 12 months — one of many highest within the London market.
Now for the catch: this share trades on 14 occasions trailing earnings, delivering an earnings yield of seven.1% a 12 months. In different phrases, the present money payout will not be lined by historic earnings, maybe hinting at potential dividend cuts to return.
A restoration play?
From the above numbers, some buyers would possibly view ITV inventory as a basic worth lure. I can see why, however hope that it might be a long-term restoration play as a substitute.
On Thursday, 6 November, ITV launched a buying and selling replace for the primary 9 months of this 12 months. For late 2025, the broadcaster expects promoting revenues to fall 9% 12 months on 12 months, hit by corporations reining in spending earlier than the UK Funds on 26 November. Christmas advertising and marketing campaigns normally make the fourth quarter ITV’s most worthwhile.
Because of this, the group intends to chop prices by £35m to offset decrease revenues. On a extra constructive observe, whole revenues rose 2% to £2.8bn within the first 9 months of 2025. This was aided by digital promoting up 15% and an 11% hike at ITV Studios, its manufacturing arm.
Though ITV is a linear broadcaster in an on-demand and streaming world, its digital and studio arms are booming. Certainly, ITV Studios would possibly appeal to takeover curiosity from a worldwide media group in search of low cost content material and distribution. Additionally, the FIFA World Cup finals in 2026 ought to ship a giant increase to revenues, because the Euros match did in 2024.
In abstract, I’ve little interest in promoting this FTSE 250 share at present worth ranges. That’s as a result of my optimistic two-year worth goal is over 100p a share!
