Image Alt

The Investing Box

  /  Editor's Pick   /  2 cheap FTSE 100 dividend stocks! Should I buy them?

2 cheap FTSE 100 dividend stocks! Should I buy them?

Screen of price moves in the FTSE 100

Is FTSE 100 property share Land Securities Group (LSE: LAND) too good for income investors like me to miss? It boasts a dividend yield of 4.6% for the financial year to March 2022. This reading moves to 5% for the following fiscal 12-month period too.

There are plenty of people who believe the property giant will recover strongly when the pandemic passes, supported by the company’s many self-help measures. These include building more homes to capitalise on the UK’s rock-solid housing market, and revamping its retail assets with a great focus on improving the customer experience.

But I’m not one of these glass-half-full people. Okay, those yields look mighty attractive. But it’s possible that the pandemic will last long into the future, a devastating scenario for both its office and retail portfolio.

Latest data from researcher Springboard showed store visits during the Boxing Day sales down a whopping 45% from pre-pandemic levels as consumers fretted over soaring Covid-19 infection rates.

Dicing with danger

This news is particularly worrying given the huge debts Landsec nurses. Adjusted net debt stood at an eye-watering £3.5bn as of September. However, my fears over the FTSE 100 firm stretch well beyond the immediate term.

I’m concerned what impact changing employee habits will mean for office space demand as flexible working takes off. The rapid growth of e-commerce also poses a massive danger to future profits.

Sure, Land Securities boasts huge dividend yields. It also offers great value in terms of predicted earnings (a forward price to earnings growth (PEG) ratio of 0.5 sits well inside bargain-basement territory of 1 and below). I think the risks of buying Landsec shares far outweigh the possible rewards.

A FTSE 100 dividend share I’d rather buy

As I say, Land Securities’ increased focus on the UK housing market is a step in the right direction. But, as an investor, wouldn’t I be better off exploiting this theme by buying a pure housebuilding share? I think so. It’s why I’m considering snapping up some Berkeley Group (LSE: BKG) stock today.

Some interesting news on regional homes demand caught my eye over Christmas. Property listings business Rightmove said thatin recent months we’ve seen higher demand to live near London, with buyer inquiries returning towards pre-pandemic levels.”

Flat demand in particular is spiking and this bodes particularly well for Berkeley. This particular housebuilder is focussed on building homes in the capital and the Southeast England.

My main concern for housebuilders is the rate at which building material costs are rising. The product shortages driving up costs also threatens to hit building rates too. However, it’s my opinion that the potential rewards for housebuilders (and their shareholders) as property prices boom more than offsets this risk.

Today, Berkeley boasts a big 6.6% dividend yield for this fiscal year (to March 2022). The dial remains elevated at 5% for financial 2023 too. This is a FTSE 100 share I’d happily buy today and hold for years to come. I expect homes demand to continue outpacing supply long into the future.

The post 2 cheap FTSE 100 dividend stocks! Should I buy them? appeared first on The Motley Fool UK.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

More reading

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended 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.