Two Neil Woodford dividend stocks you can buy for under a fiver

Neil Woodford is the UK's most prominent fund manager. While his performance over the last year has been underwhelming, his long-term track record is excellent. Today, I'm looking at two Woodford-owned dividend stocks that can be bought for less than £5.

Saga

At the end of September, Woodford's Income Focus fund held a 1.34% weighting in Saga(LSE: SAGA). The £2.1bn market cap company is a leading provider of insurance, travel, personal finance and healthcare products and services to over 50s.

There's several things I like about it. First, the UK's ageing population should provide significant tailwinds to the company's growth in coming years. According to ONS population projections, the number of people aged 50 and over in the UK is set to grow from 23m in 2013 to 29m in 2033, meaning this demographic will represent 40% of the population. As a key provider of services to the older generation, Saga looks well placed to capitalise on this trend.

Second, the group appears to have momentum at present, yet remains attractively valued. In its most recent half-year results, underlying profit before tax rose 5.5%. City analysts expect earnings of 14.2p this year, which at the current share price of 186p, places the stock on a forward P/E of a reasonable 13.1.

Saga also offers considerable dividend appeal. The group paid a maiden dividend of 4.1p per share in 2015, however, over the last two years has increased the payout to 7.2p and 8.5p. Analysts expect 9.2p this year, which equates to a high yield of 4.9% at the current share price.

Combining the long-term story with the attractive valuation and high yield, Saga looks to have considerable investment appeal, in my opinion.

G4S

Another Woodford holding that can be picked up cheaply is G4S(LSE: GFS). The stock made up 1.02% of Woodford's flagship Equity Income fund at the end of September. The £4bn market cap company provides security solutions to a broad range of clients across six continents.

Like Saga, G4S appears to have a long-term theme at play. With geopolitical risk increasing at an alarming rate, demand for security solutions is likely to remain strong.

The shares have not enjoyed a great few months. Indeed, back in July, they were changing hands for 340p. However, since I covered the group's half-year results in August, they have pulled back considerably, and now can be bought for just 256p. I'm wondering if that's an opportunity for long-term investors?

The group stated earlier this month that trading for the first nine months of the year was in line with expectations, with organic revenue growth of 4.4%. It expects "good profit growth" for the full year. With analysts expecting 2017 earnings and dividends of 18.1p and 9.7p respectively, the recent share price weakness has lowered the company's forward P/E to just 14.1 and boosted the yield to 3.8%. Those metrics looks attractive to me.

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Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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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