A high-dividend company I’d buy for the stock market recovery!

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Plummeting share prices across the London Stock Exchange have supercharged dividend yields for many UK shares. I’ve been adding to my own investment portfolio in 2022 to ride the eventual stock market recovery. And I plan to buy some more high dividend shares to boost my passive income.

Newspaper publisher Reach (LSE: RCH) is one UK dividend share on my radar today. Its sinking share price has driven its dividend yield through the roof and means it trades on a rock-bottom valuation.

Profits pain

Reach’s share price has slumped 68% in 2022 as worries over advertising revenues have grown. These concerns have proved bang on target, too, with the company’s latest financials showing group revenues down 1.6% in the six months to June.

Falling ad sales aren’t the firm’s only problem, either. Soaring paper and energy prices are also pushing newsprint costs to all-time highs.

Collectively these issues caused Reach’s operating profits to tank 31.5% in the first half. And more pain could be in store as economic growth cools and power costs balloon.

Yet even as profits crumbled, Reach chose to raise the interim dividend. It raised the payout 4.7% year on year, to 2.88p per share. The business remains committed to growing dividends and can do this through its solid cash flows.

Too cheap to miss?

I’d argue that Reach is a top value stock to buy following its recent decline. The business trades on a forward price-to-earnings (P/E) ratio of 2.8 times. It also boasts a huge 8.3% dividend yield.

The publisher looks in great shape to make this year’s anticipated dividend payment, too. The estimated reward of 7.5p per share is covered 4.2 times by expected earnings, more than double the benchmark of two times that provides a good margin for error.

Reach’s dividend forecast gets even better for 2023 as well. A predicted payout of 7.8p per share drives the yield to an even-better 8.6%. Dividend cover also remains unchanged at this year’s levels.

Read all about it!

Given its startling cheapness, I’d expect Reach’s share price to soar during any stock market recovery. This is an income share I’d look to hold for the long haul, too.

I like the range of titles it has in its locker like The Daily Mirror, The Daily Express and Manchester Evening News. In this era of ‘fake news’, owning established titles that are well trusted like these is worth its weight in gold. This explains why the group’s audience continues to outperform the broader publishing sector.

What’s more, I like the huge success Reach is enjoying to in the lucrative digital publishing arena. The company has invested heavily in its online operation and the number of registered digital users has more than doubled between December 2020 and today, to 11m.

City analysts think Reach will record a 12% earnings decline in 2022. But they also believe the business will bounce straight back into growth with a modest 1% rise next year. I’d buy the dividend stock today in anticipation of a solid and sustained recovery.