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These FTSE 100 dividend stocks yield 5.6% and 9.6%. Which would I buy for my ISA?

Royston Wild
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A quick look at British Land’s (LSE: BLND) share price performance over the past few weeks would suggest that market-makers were expecting a scary set of trading numbers when half-year numbers were unveiled today.

Its share price plummeted to one-month lows around 550p per share in the run-up to Thursday business but rose modestly in the wake of the release. British Land’s interims might have been broadly what investors had been expecting, but there was enough in there to suggest the share price could continue its recent slide.

This is why I’m happy to avoid the FTSE 100 property play despite its market-beating forward 5.6% dividend yield.

Losses widen

In that latest update British Land, which operates retail and office space the length and breadth of the country, announced that ongoing difficulties in the shopping sector meant that pre-tax losses had ballooned in the six months to September. These came in at £404m versus a milder £48m a year earlier.

Equally shocking was news that troubles on the high street caused British Land to write down the value of its property portfolio by 4.3%, to £11.7bn. In total the business slashed valuations on its retail assets by a tenth (or 10.7% to be exact) and these are now worth £4.8bn. By comparison, the value of its office estate, that other core area, rose by a modest 0.4% to £6.4bn.

And worryingly there could be more trouble on the horizon, the Footsie firm advising that “we expect retail to remain challenging, so we’ll focus on driving operational performance and maintaining occupancy.”

On shaky ground

That latter goal could prove increasingly problematic, however, as a combination of cooling revenues growth and rising costs forces more and more physical retailers out of business. It’s not just that political and economic conditions and the subsequent impact on consumer appetite look set to last through 2020 at least. It’s that the rampant growth of e-commerce threatens to keep British Land’s property values dwindling over the longer term too.

Despite its rising problems and recent share price weakness, the property business still trades on a forward P/E ratio of 16.7 times, sailing above the FTSE 100 average of 14.5 times. This high rating doesn’t correspond with its rapidly-rising risk profile, in my opinion, and leaves the business wide open for much more sharp share price weakness.

I’d buy this 9.6% yield instead

If you’re looking to get rich from property then Persimmon (LSE: PSN) is a much better bet, in my opinion, and not just because of its superior value for money. At current price the housebuilder changes hands on a forward P/E multiple of 9.1 times and boasts a gigantic 9.6% corresponding dividend yield as well.

This Footsie share also updated the market this month but unlike British Land, its own financials contained no nasties. Sure, flatter property prices than in previous years may be hurting profits growth, but the UK’s vast homes shortage means that trading at Persimmon and its peers remains quite robust.

Both weekly average sales per site and forward sales remained broadly stable (at 0.67 and £950m respectively) between the beginning of July and November 6, the company said. It’s quite likely revenues will rise markedly once it ramps up production too.

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

Motley Fool UK 2019