Shopping for low cost shares moderately than costly ones isn’t a foolproof technique. Generally shares are low cost for a jolly good purpose. They usually could stay low cost, for years. And even get cheaper, as efficiency flounders and buyers give up.

But I don’t assume that applies to the next two FTSE 100 firms. Each look good worth to me. Additionally they supply reliable-looking dividend yields of greater than 5%.

An investor who divided this 12 months’s £20,000 Shares and Shares ISA contribution restrict equally between these two might safe earnings of greater than £1,000 a 12 months. And there’s a good probability that can rise over time.

HSBC presents dividends and development

Asia-focused financial institution HSBC (LSE: HSBA) has a trailing dividend yield of round 5.9% a 12 months. It seems attractively valued too, with a price-to-earnings (P/E) ratio of just below 9. 

I’m stunned by that low P/E, given how effectively the shares have completed. HSBC’s share price has climbed by 33% during the last 12 months. Over 5, it’s up 45%. 

The board’s additionally been proactive in returning capital to shareholders by means of share buybacks, spending a thumping $3bn 1 / 4.

In its Q3 outcomes for 2024, HSBC reported a revenue earlier than tax of $8.5bn, up from $7.7bn the earlier 12 months. Income additionally elevated from $16.2bn to $17bn.

But the board isn’t resting on its laurels. It’s now winding down its funding banking arm as CEO Michael Roberts shifts to a “more competitive, scalable, financing-led model”. It’ll even have a decent Asia focus.

HSBC faces being the meat in a superpower sandwich, because the US and China face off. It’s clearly chosen its facet. That’s not the one danger. If rates of interest fall, that would squeeze internet curiosity margins. The transitional course of brings execution dangers.

Higher publicity to China isn’t a one-way wager both, given the nation’s property disaster. Donald Trump’s commerce warfare received’t assist. But I nonetheless assume HSBC is effectively value contemplating each for earnings and development, with a long-term view.

Investing £10k in HSBC shares on the present yield would supply an annual earnings of £590.

My second earnings development decide, cigarette maker Imperial Manufacturers (LSE: IMB), boasts a trailing yield of about 5.5%. So £10k in that might ship earnings of £550. That’s whole earnings of £1,140, which I’d anticipate to rise over time as income develop (no ensures although).

Imperial Manufacturers has rocketed this 12 months

Imperial Manufacturers additionally seems good worth, with a P/E ratio of round 9.3. That’s regardless of the corporate’s share price surging 47% over 12 months, though it was unstable earlier than that. Buyers can’t anticipate the share price to easily plough on.

In its full-year outcomes for 2024, Imperial Manufacturers reported a 4.5% improve in working revenue to £3.55bn. That was regardless of a slight decline in whole income. 

Internet income from next-generation merchandise, together with tobacco options like vapes, grew by 26%. They now account for 8% of whole income.

Cigarette shares are inherently dangerous. Mainly, firms are pushing a product that kills. They face fixed regulatory pushback. Rising revenues from smokeless options might set off stiffer guidelines.

No funding is with out dangers. These two actually aren’t. However their excessive earnings and development prospects make each effectively value contemplating. However solely with a minimal five-year view. And ideally loads longer than that.