There are a few cheap S&P/ASX 200 Index (ASX: XJO) shares I've got my eyes on, which could provide investors with large dividend yields.
One of the benefits of a cheap stock is that if it pays a dividend, it translates into a more attractive payout.
I wouldn't want to buy a stock just for the income. The valuation should be appealing, and the business should have an outlook of long-term growth, in my view.
Let's have a look at what businesses are appealing to me.
APA Group (ASX: APA)
This business is a major energy infrastructure business. It owns and manages a very large portfolio of gas, electricity transmission, solar, and wind assets. APA's key asset is its national gas pipelines, though it also connects various states with electricity transmission assets.
Energy (including gas) will be an important part of the Australian economy for decades to come, and APA is essential to that.
Impressively, APA has grown its distribution every year for the last 20 years in a row. It's expecting to grow its FY25 distribution by 1.8% year over year to 57 cents. That translates into a future distribution yield of 6.9%. I'd describe this as a cheap ASX 200 share because it's down around 31% since August 2022.
Elders Ltd (ASX: ELD)
Elders says it works closely with farmers, providing products, marketing and specialist technical advice across rural, wholesale, agency, and financial products and services. The company also has a rural and residential property agency and management network.
With the Elders share price having declined around 32% since September 2024, I think it looks like a much more appealing cheap ASX 200 share, particularly given the potential for this cyclical business to bounce back in the medium term when conditions improve.
The business doesn't have a consistent dividend payout, but it's predicted to be fairly high in the medium term.
According to the forecast from UBS, the Elders dividend is predicted to be 7.3% grossed-up, including franking credits in FY25.
Metcash Ltd (ASX: MTS)
This business has three different pillars – food, liquor, and hardware.
The food business supplies IGA supermarkets around the country, while the liquor segment supplies independent retailers such as Cellarbrations, The Bottle-O, IGA Liquor, Porters, and Thirsty Camel.
I'm most interested in Metcash's hardware segment because businesses like Mitre 10, Home Hardware, and Total Tools could benefit from an increase in renovation and construction activity.
I believe interest rate cuts could help lift demand for hardware and help push up Metcash's profit and dividend. According to the estimate on Commsec, the business could pay a grossed-up dividend yield of 7.5%, including franking credits, in FY25.
It looks like a cheap ASX 200 share after falling around 31% since April 2022.
