2 recovering dividend stocks I'd buy today

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ITV

Brexit is causing considerable uncertainty for a number of UK-focused companies. It has already weakened the pound and pushed inflation higher. This has disrupted the growth outlook for the economy and means that businesses and consumers are now less confident than they were prior to the EU referendum.

While this means that the financial performance of UK-focused companies could suffer, a number of stocks could offer strong dividend prospects and share price growth potential. Here are two such companies which could be worth buying right now.

Solid performance

Reporting on Wednesday was prime housebuilder Berkeley Group(LSE: BKG). The company's trading update related to the first four months of the year, with trading conditions being tough. The update states that uncertainty around the terms and implications of Brexit have caused the key London market to be adversely affected. Alongside this, the planning environment remains challenging, while mortgage interest deductibility and changes to stamp duty have also stifled demand for new properties.

Despite this, Berkeley Group continues to make progress with its strategy. Its sale prices have remained above business plan levels, while the group has a strong forward sales position and an impressive land bank. This gives the company confidence in its outlook, which means it is on target to deliver on its capital return plan. This is where around £2.2bn will be returned to shareholders in the five years to April 2021 in a mixture of dividends and share buybacks.

The capital return plan amounts to £16.34 per share (£8.34 will have been paid by September 2017) and equates to an annualised dividend yield of just over 5%. With the company's shares trading on a price-to-earnings (P/E) ratio of just 11, it seems to offer excellent value for money and well capable of delivering a recovery following the difficulties experienced after the EU referendum.

Uncertain outlook

The future for ITV(LSE: ITV) is somewhat uncertain at the present time. The company is facing a challenging period due to Brexit and the prospect of UK economic weakness. However, it is also in the process of changing its management team, with a new CEO set to start work in the near term. This could lead to a changing strategy, and may cause investors to wait and see for more information before buying the stock.

That said, ITV offers a stunning dividend outlook. It currently yields 5% from a dividend which is covered twice by profit. This provides it with the scope to raise dividends rapidly. In fact, the company is due to yield over 6% next year, which could be more than twice the rate of inflation.

As well as upbeat income prospects, ITV also has a relatively low valuation which suggests there is a wide margin of safety. It has a P/E ratio of 10.2, which indicates there could be significant upside potential after its share price decline of 23% in the last year.

Brexit uncertainty

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Peter Stephens owns shares in Berkeley Group. 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.