FTSE 100 shares have, broadly talking, loved a wholesome price bump in latest weeks.

But the index remains to be an important place to choose up bargains. Years of investor fear over the financial and political backdrop imply many prime shares nonetheless carry bargain-basement valuations.

I imagine the Footsie is a superb place to purchase shares for dividends. Qualities like numerous income streams, big aggressive benefits, and powerful stability sheets could make them superb locations to get a sustainable and huge passive revenue.

What’s extra, long-term share price underperformance means many of those carry substantial dividend yields.

2 shares on my radar

I’ve been in search of firms that commerce on ahead P/E ratios under the Footsie common of 11 instances. Dividend yields above the three.5% index common is one other high quality I’ve been searching for.

The blue-chips I’ve discovered may be seen under. The typical dividend yield throughout them stands at a whopping 6.2%.

I feel these shares will present a steadily-growing dividend over the long run too. Right here’s why I feel they’re price an in depth look in June.

Large yields regardless of lower

Vodafone disenchanted traders in early 2024 by lastly asserting a widely-expected dividend lower. But it surely’s not all been dangerous information for traders.

Regardless of the rebasement — the telecoms agency has halved the dividend for this yr, to 4.5 euro cents per share — the ahead yield nonetheless is available in above 5%.

The enterprise additionally declared its “ambition to develop it over time“. That is maybe an unsurprising assertion, but it surely’s one which might be made extra probably because the agency invests extra within the enterprise to develop earnings. Plans embrace increasing its fibre and 5G networks, and supercharging gross sales at its spectacular Enterprise unit.

Within the meantime, Vodafone has began a €2bn share buyback programme to ease the blow of decrease dividends to traders. This follows the latest sale of its Portuguese belongings. And the agency mentioned one other €2bn price might be repurchased early subsequent yr when the sale of Vodafone Italy completes.

Competitors is fierce within the telecoms sector, and Vodafone has an extended historical past of underperforming its rivals. However given the cheapness of its shares and with its transformation accelerating, now might be a great time to purchase the FTSE share.

One other prime discount

Whereas dividends are by no means assured, I’m not anticipating the dividend on Aviva shares to be lower anytime quickly. Metropolis analysts agree. In truth, the life insurance coverage large is tipped to develop annual payouts right through to 2026.

These wholesome projections are constructed on the power of Aviva’s stability sheet. The common premiums it collects imply it’s extremely money generative. And so its Solvency II capital ratio stood at a superb 206% as of March.

So why aren’t all dividend traders flocking to the corporate? The draw back is the potential wrestle to develop earnings if financial circumstances stay robust.

On this state of affairs, Aviva’s share price may stagnate and even fall, resulting in disappointing shareholder returns regardless of giant dividends.

But I imagine this threat is baked into the cheapness of its shares. In addition to buying and selling on that low P/E ratio, Aviva’s price-to-earnings progress (PEG) a number of is 0.6.

Any studying under 1 signifies {that a} inventory is undervalued.