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2 cheap passive income shares to consider before it’s too late!

Black woman using loudspeaker to be heard
Image source: Getty Images

I’ve been buying dirt cheap passive income shares for my Self-Invested Personal Pension (SIPP) in recent weeks. And I’m looking to keep my shopping spree going as signs of a new bull market grow.

Here are two top UK shares I think savvy investors should consider today. They trade on ultra-low earnings multiples, giving them scope for substantial share price gains in 2024 and beyond.

These bargain stocks also carry market-beating dividend yields, making them attractive possibilities for those seeking a passive income.

Healthy dividends

Property stocks have been depressed by higher interest rates in the past 12-18 months. Companies such as Assura (LSE:AGR) have experienced a decline in their portfolio values, which have negatively impacted their earnings.

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This particular real estate investment trust (REIT) — which lets out primary healthcare centres across Britain — saw its net asset value (NAV) per share drop to 49.4p in the 12 months to March. This was an 8% year on year fall.

Interest rates may remain at higher levels if inflationary pressures endure. However, there’s a significant chance of rate cuts following recent inflation data.

Indeed, the IMF now expects the Bank of England to cut rates maybe as many as three times in 2024 alone. Such actions could give Assura’s struggling share price a huge boost in the coming months.

A cheap valuation certainly leaves scope for new gains as the firm trades on a forward price-to-earnings (P/E) ratio of 12 times. This is well below its five-year average of 21.4 times.

I believe Assura has incredible long-term growth potential too. It stands to benefit from rapid growth in the UK’s elderly population, and the strain this will place on existing healthcare infrastructure.

And because of REIT rules, it could deliver impressive passive income streams in the process. These companies must pay at least 90% of annual rental profits out by way of dividends.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Another top bargain

TBC Bank Group (LSE:TBCG) is another FTSE 250 share that offers exceptional all-round value. The Georgian bank trades on a forward price-to-earnings (P/E) ratio of 4.2 times, following on from recent share price weakness.

This compares to a five-year average of 6.2 times. The bank also carries a mighty 8.3% dividend yield.

The risks to TBC investors have increased in recent weeks as political unrest in the Eurasian country mounts. But I’d argue that the bank’s heavy price falls more than factor in this heightened danger.

Healthy dip buying by the bank’s executives in recent days underlines its attractive value at current prices. TBC’s deputy chief executive and chief financial officer Giorgi Megrelishvili has recently increased his stake. So has head of international business, Oliver Hughes.

Like Assura, I expect the business to deliver sustained earnings and dividend growth in the coming years. This will be driven by soaring financial product demand as wealth levels in Georgia rise. The company’s near-16% profits jump in the first quarter underlines its immense growth potential.

The post 2 cheap passive income shares to consider before it’s too late! appeared first on The Motley Fool UK.

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Royston Wild has no position in any of the 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.

Motley Fool UK 2024