3 dirt-cheap FTSE 100 shares to buy now

I am always on the lookout for dirt-cheap FTSE 100 shares to buy for my portfolio. And, right now, it looks to me as if there are a range of options in the blue-chip index, which seem too good to pass up.

Dirt-cheap FTSE 100 miner 

The first company on my list is the mining group Rio Tinto (LSE: RIO). Currently trading at a forward price-to-earnings (P/E) multiple of 7.9, the stock looks incredibly cheap, compared to the rest of the market.

However, I should note this equity may be cheap for a reason. Commodity prices can be volatile, and as one of the world’s largest iron ore miners, Rio Tinto is heavily exposed to the price of the steel ingredient, iron ore. If the price suddenly slumps, Rio’s outlook may suddenly become a lot more uncertain.

Still, I think the company is a great way to invest in the global economic recovery. That is why I would buy shares in this FTSE 100 group today. The stock’s dividend yield could also hit the double digits next year, according to current projections. 

Shares to buy for growth

Alongside Rio, I would also buy Barratt Developments (LSE: BDEV) for my portfolio FTSE 100 income stocks. This is a play on the UK housing market, a sector that is structurally undersupplied, and where property prices seem to be rising almost every month.

I think it is unlikely property prices will rise indefinitely, but there will always be a demand for new dwellings.

Large homebuilders like Barratt have a competitive advantage because they can negotiate better deals for materials with suppliers and for land from sellers. 

As long as the company can maintain this competitive advantage, I think it is a great way to invest in the UK housing market. That said, all homebuilders are currently encountering significant challenges, including higher materials costs and wage inflation. An increase in interest rates may also weigh on home prices and hurt demand.

Despite these headwinds, I would buy the company, which is currently selling a forward P/E of 9.1 and offers a 4.5% dividend yield.

Market underdog

The final dirt-cheap FTSE 100 company I would buy for my portfolio is the broadcaster ITV (LSE: ITV). The combination of the drop-in advertising demand during the pandemic, competition from large American streaming companies, and a general shift away from terrestrial television are all factors that have held ITV back over the past two years. 

While these factors are still significant risks, I think the market’s opinion of the broadcaster is far too depressed. Indeed, despite a modest recovery in earnings, the stock is still trading at a forward P/E of just 8.2. 

As earnings recover, the company has also pledged to restore its dividend. Analysts believe the stock will offer a yield here of 3.4% next year, based on current projections. 

Therefore, despite the headwinds outlined above, I would buy the stock as a recovery share for my FTSE 100 portfolio.