Time to get greedy with these 2 dirt-cheap dividend stocks?

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FTSE 100 Share prices going up

Finding dividend stocks which also offer a mix of value and growth potential is never easy. That's particularly the case at the present time, since higher inflation may be causing dividend shares to experience higher demand from yield-hungry investors. Furthermore, since share prices are generally high right now it is becoming more challenging to unearth dirt-cheap investment opportunities.

However, such investments are still out there. Here are two possible examples which could be worth buying now for the long term.

Strong performance

Reporting on Thursday was gaming company GVC (LSE: GVC). The business performed well in the third quarter of the year, with group daily net gaming revenue (NGR) rising by 10% versus the same period of the previous year. This performance was perhaps better than it appears at first glance, since the comparable period from last year was boosted by the final stages of the UEFA Euro 2016 tournament. Stripping out the effect of that tournament and the impact of Kalixa (which was disposed of in May 2017) means that the company's NGR revenue increased by 18%.

Looking ahead, GVC is forecast to post a rise in its bottom line of 19% in the next financial year. This puts its shares on a price-to-earnings growth (PEG) ratio of just 0.7, which suggests that they offer high growth at a reasonable price.

In terms of its dividend potential, the company has a yield of 3.3% at the present time. However, dividends represent just 54% of net profit. Therefore, they could increase at a faster pace than profit growth without hurting the company's financial stability. And with a growing market for its products as well as a sound strategy, now could be the right time to buy a slice of the business for the long term.

Dividend growth potential

Also offering the potential for high dividend growth in future years is support services company G4S(LSE: GFS). It is forecast to post a rise in its bottom line of 5% in the current year, followed by additional growth of 10% next year. This puts it on a PEG ratio of only 1.4, which suggests it is good value for money when the FTSE 100 is close to a record high. As such, its share price could move higher.

With a dividend yield of 3.5%, G4S is not one of the highest-yielding shares around at the present time. However, since dividends are covered twice by profit they could rise at a rapid rate. This could make the stock more popular among investors and help it continue the momentum that has seen it rise by 20% during the course of the last year.

With the support services sector experiencing some difficulties this year, G4S could become an increasingly volatile stock in the near term. Although its financial performance appears to be sound, investor sentiment towards the sector could deteriorate after a number of profit warnings have been released by companies within the same industry. However, in the long run G4S appears to have a potent mix of dividend, growth and value potential.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended GVC Holdings. 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.


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