2 bargain-basement income stocks to consider in an ISA

Looking for dirt cheap dividend stocks to buy this ISA season? If the answer’s ‘yes,’ you’re in luck. Recent market volatility means many top income stocks now trade on rock-bottom valuations and have sky-high dividend yields.

Here are two I think could be considered for a Stocks and Shares ISA.

Holding the cards

Card Factory‘s (LSE:CARD) the first of these dividend shares I think investors should consider. Like any retail share, it’s exposed to a rapid downturn in consumer spending. With the Middle East crisis escalating, this is a serious risk right now.

But then again, a focus on the value end of the market could stand Card Factory in good stead. After all, people don’t stop sending birthday cards and celebrating major occasions even when times get tough. The company’s revenues could remain largely stable if shoppers switch down from more expensive card sellers.

What’s more, it could be argued that Card Factory’s shares are already at bargain-basement levels. Its forward price-to-earnings (P/E) ratio sits at 4.8 times, which some say fully reflects the challenges the retailer faces and may limit price downside.

Today, Card Factory shares carry an enormous 8.4% dividend yield for this financial year (to January 2027). The good news too is that the predicted 5.2p per share annual dividend is covered 2.4 times by anticipated earnings. So even if earnings get blown wildly off course, that expected shareholder payout still looks in good shape.

Besides, management’s drive to slash costs should help protect profits and dividends if sales drop. Over the long term, I think returns here could fly as it expands into higher-margin gifts and celebration accessories, expands into more international markets, and invests in the high-growth online channel.

Another top income stock

In an age of streaming, it’s easy to see why ITV (LSE:ITV) shares might not be everyone’s cup of tea. Changing viewer habits could see traditional broadcasters like this eventually mowed down by Netflix and its peers.

Could these fears be exaggerated? In the case of ITV I think so. This is for two reasons. First of all, the company’s making its own impressive inroads into the streaming market and even outperforming the US giants. The number of active users on the ITVX platform surged 12% year on year in 2025, reflecting the depth of its popular programming.

The second reason is that, through its ITV Studios arm, the business has excellent sales opportunities as media companies battle it out for content. Last year, external revenues at the production unit rose 10% which it said “reflected strong demand from global streaming platforms“.

I’m a big fan of ITV. And especially when adding the company’s exceptional value for money into the bargain. Its price-to-earnings growth (PEG) ratio of 0.5 for 2026 sits well inside value territory of 1 or below. The dividend yield’s a gigantic 6.7% as well, based on an expected 5p payout.

The post 2 bargain-basement income stocks to consider in an ISA appeared first on The Motley Fool UK.

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