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4.6%+ dividend yields! Should I buy these cheap FTSE 100 shares?

Screen of price moves in the FTSE 100

These FTSE 100 shares seem to offer exceptional value at first glance. Should I buy them for my shares portfolio?

Barclays in bother?

Today, Barclays (LSE: BARC) seems to offer brilliant all-round value for money. It trades on a price-to-earnings (P/E) ratio of 6.7 times for 2022 and boasts a meaty 4.6% dividend yield.

But I’m not prepared to take a gamble on the FTSE 100 firm as the British economy slows sharply. That’s even though the Bank of England (BoE) could boost the bank’s profits with several more interest rate rises next year.

It’s also important to remember that the BoE may lack the motivation to raise rates again soon. Even if inflation remains at elevated levels, the potentially-crushing effect of Omicron on British GDP may force the bank to stay its hand.

Earlier this month, the British Chambers of Commerce slashed its growth forecasts for the UK to 4.2%. That’s down a full percentage point from its prior forecasts, and was announced before fresh Covid-19 restrictions came into force. With infection rates rising again, it seems as if profits estimates for Barclays and its peers are in increasing danger.

The property powerhouse

Would I be better off buying Land Securities Group (LSE: LAND) shares instead? This UK share also offers plenty of bang for your buck, carrying a forward price-to-earnings growth (PEG) ratio of 0.5 and a 4.7% dividend yield. Fans of the predominantly commercial property owner would argue that its recent solid recovery should continue as it embarks on asset sales and acquisitions to rebalance its portfolio from at-risk sectors.

However, I’m not so convinced. Landsec’s only saving grace is its exposure to some residential property assets. I believe it stands to lose out as the growth of e-commerce batters physical retail, and the rise of homeworking reduces demand for office space. The FTSE 100 firm stands to fare particularly badly next year if the Omicron variant continues to spread and people stay at home in large numbers again.

6.9% dividend yields!

Truth be told, I’d much rather invest my hard-earned cash in Vodafone Group (LSE: VOD). I’m not going to suggest that this telecoms business doesn’t face risks of its own. The industry in which it operates is highly competitive and massively regulated, factors that pose enormous threats to future profits.

However, I think the benefits of me owning Vodafone outweigh the potential dangers. I like the huge amounts the FTSE 100 firm is investing in fast-growing 5G. I’m also encouraged by Vodafone’s African emerging markets, regions where demand for its telecoms and its mobile money services are booming as personal income levels there increase.

Today, Vodafone trades on what I consider an undemanding forward P/E ratio of 12.1 times. Though what really grabs my attention is the company’s juicy 6.9% dividend yield. I think this FTSE 100 share could make me buckets of cash in the years ahead.

The post 4.6%+ dividend yields! Should I buy these cheap FTSE 100 shares? 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 recommended Barclays and Landsec. 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.