I’d buy this crashed FTSE 100 share for its near-7% dividend yield!

A person holding onto a fan of twenty pound notes

Despite the ongoing US stock-market slump, the UK’s FTSE 100 index has held up well so far this year. As I write, the Footsie stands at 7,516.69 points, up 1.8% since 31 December 2021. Not all large-cap shares have held steady in 2022 — but as some share prices have slumped, they look increasingly attractive to me. So there’s one cheap share that I don’t own today, but would buy for its market-beating dividend yield.

The FTSE 100’s winners and losers over one month

Over the past month, the FTSE 100 has gained 1.8%. As you’d expect, some shares have done well, while others have lagged behind. Of 100 Footsie stocks, 25 have risen in value over 30 days. These gains range from 0.6% to 14.8%, with an average of 4.2%. Meanwhile, losses among the Footsie’s 75 losers range from 0.3% to a hefty 28.1%, with an average decline of 8.5%.

However, as share prices fall, bargain-hunting value investors like me actively go hunting for beaten-down, cheap stocks. And among the FTSE 100 five worst performers over the past month, I found one share I’m drawn to for its generous dividend yield.

I’d buy one battered share now for its dividend yield

For the record, these are the FTSE 100’s five biggest fallers over the past month:

Company Sector Share price (p) One-month decline 12-month change
B&M European Value Retail Retail 422.1 -17.6% -26.5%
Segro Property 1,119.50 -17.8% 8.4%
Scottish Mortgage Investment Trust Financial 709.00 -20.6% -39.1%
Aviva Financial 428.7 -24.0% -19.7%
Ocado Group Retail 772.4 -25.4% -60.6%

As you can see, losses among these five steepest FTSE 100 fallers range from nearly 18% at property group Segro to more than a quarter at online supermarket Ocado Group. The average loss across these five slumpers is over a fifth (-21.1%). But as share prices slide, they often give me an opportunity to buy future earnings and cash dividends at lower entry points. And the dividend yield of one particular loser catches my eye today.

Viva Aviva!

The battered share that I’d buy today is investment and insurance giant Aviva. After losing almost a quarter of its market value in 30 days, this FTSE 100 share now looks cheap to me. Here are its latest fundamentals, following sustained price falls:

Share price 429.30p
52-week high 606.58p
52-week low 384.00p
Market value £12.0bn
Price-to-earnings ratio 51.6
Earnings yield 1.9%
Dividend yield 6.8%

At their current price, Aviva shares lie 177.28p below their 52-week high of 606.58p, hit on 29 March 2022. That’s a collapse of 29.2% in under two months. As a result of this crash, Aviva’s cash dividend yield has surged to 6.8% a year. That’s 1.7 times the near-4% cash yield on offer from the wider FTSE 100.

However, it’s not been plain sailing at Aviva recently. A fiery annual general meeting on 6 May included rude and sexist remarks directed at CEO Amanda Blanc and other female board members. Yet the group plans to return £4.75bn of excess capital to shareholders, worth almost two-fifths of its current market cap. It’s for this capital return and their generous dividend yield that I’d buy Aviva shares today!

The post I’d buy this crashed FTSE 100 share for its near-7% dividend yield! appeared first on The Motley Fool UK.

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Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has recommended B&M European Value and Ocado Group. 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.