My wife and I have taken advantage of the usual summer lull in stock markets to buy 10 new stocks. These consist of eight new FTSE 100 shares and two new FTSE 250 stakes.

We bought eight of these stocks on Monday, 14 August. The Motley Fool trading rules mean that I cannot discuss these new holdings until 17 August. However, we bought two of our new stakes on 9 August. Hence, I am free to cover this pair of FTSE 100 shares from today.

Why are we aggressively buying such stocks?

My wife and I have been busily investing a tax-free windfall in yet more cheap Footsie stocks, but why? Because the UK’s main market index is as cheap today as it’s been in many, many years.

On Monday, the FTSE 100 closed at 7,507.15 points, valuing the 100 largest London-listed companies at around £1.97trn. At this level, the index trades on a lowly rating of 10.8 times earnings, for a hefty earnings yield of 9.2%.

What’s more, it offers a forward dividend yield of around 4.1% a year, covered almost 2.3 times by earnings. In short, the index looks very cheap right now, both in historical and geographical terms.

Our new dividend dynamo: M&G

Last week, my wife bought shares in FTSE 100 asset manager M&G (LSE: MNG) for an all-in price (including buying commission and stamp duty of 0.5%) of 199.6p a share.

M&G has been around since 1931 and was an early pioneer in mutual funds for UK and European investors. At the end of last year, it controlled £342bn of client assets for 5m retail customers and more than 800 institutional clients.

When financial markets are rising, asset managers like M&G tend to do well by riding this tide. However, both stock and bonds prices plunged in 2022, wiping out the group’s profits and pushing it into a loss.

Over one year, M&G shares have lost 11.2% of their value. Over five years, this stock has declined by 13.7%. However, these returns exclude cash dividends, which are very generous for M&G shareholders.

On Monday, M&G stock closed at 194.5p, valuing the company at £4.6bn. To me, this would be a modest price tag were a much larger rival to bid for the firm as part of the ongoing industry consolidation. However, this potential takeover premium is not our main motivation for wanting to own the stock.

Put simply, my wife bought M&G shares in our family portfolio for their outstanding ability to generate market-beating dividend income. At the current share price, the stock offers a mouth-watering dividend yield of over 10% a year — one of the very highest in the London market.

Although this cash payout is not covered by trailing earnings, I expect M&G’s profits to rebound in 2023. This is why it is now one of the new dividend champions in our portfolio!

The post I just bought this FTSE 100 share for bumper income! appeared first on The Motley Fool UK.

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Cliff D’Arcy has an economic interest in M&G shares. The Motley Fool UK has recommended M&G. 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.