2 top value stocks to buy right now with 8%+ dividend yields

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Value stocks can be attractive to me as an investor as I like the opportunity to put my money into in what I think are strong businesses at decent prices.

Below are a couple of value shares I already own. I would consider buying more for my portfolio at their current prices. I do see risks, but with both shares yielding over 8%, I also think this could turn out to be a lucrative investment for me.

Abrdn

It has been a challenging time for asset managers over the past few months. Like many of its peers, the Abrdn (LSE: ABDN) share price has tumbled, falling 44% in a year.

That is a painful fall for existing shareholders. But it has pushed the dividend yield up to 9.1%.

So, has the Abrdn investment case got worse – and how safe is the dividend?

I do think things look worse for the firm than they did a year ago. Tightening consumer spending and lacklustre stock market returns have hurt several rivals. It is five months since Abrdn last updated the market on its business performance. It may also have been struggling to keep existing clients.

But I think the company’s share price already reflects the risk. Abrdn benefits from strong brand recognition. It is tackling the risk of customers jumping ship with what it calls a client-led growth strategy. Its growing focus on digital content may help it tap into a new generation of younger investors, which is a key challenge currently facing long-established asset managers.

The dividend was not covered by adjusted diluted earnings per share per share last year, although it was covered by adjusted capital generation. The dividend coverage concerns me if business performance deteriorates, as there is a risk the firm could again cut its payout like it did in 2020.

But if it can steer the business well – and I think it has a promising strategy to do so – Abrdn with its high yield could be a rewarding share to buy now for my portfolio. The price-to-earnings (P/E) ratio of 12 looks like decent value to me.

Imperial Brands

With an even lower P/E ratio of under 9, I would include Imperial Brands (LSE: IMB) among the ranks of FTSE 100 value stocks.

Investors are clearly concerned about the long-term demand outlook for the company. Not only does it rely heavily on selling cigarettes, it has actually reduced its portfolio diversification in recent years by selling its premium cigar business.

That move helped Imperial’s balance sheet though, which is positive. Meanwhile, the firm’s strategy of raising prices and trying to build market share could help it keep making big profits even as the cigarette market continues to decline over time. There is a still a lot of money potentially to be made in tobacco. Imperial’s operating profit in the first half fell compared to the same period last year — but it was still well over £1bn.

Yet the key reason I own Imperial in my portfolio is not for growth but for income. Those earnings can support generous dividends and the yield is currently 8.8%.

The post 2 top value stocks to buy right now with 8%+ dividend yields appeared first on The Motley Fool UK.

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C Ruane has positions in Abrdn and Imperial Brands. The Motley Fool UK has recommended Imperial Brands. 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.