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1 FTSE 100 dividend stock that I’d stay away from, and 1 that I’d happily buy

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There’s no shortage of shares on the FTSE 100 whose dividend yields sit above the broader main-market average of just below 4%.

Take Kingfisher (LSE: KGF), for example. The projected 11p per share payout that City analysts have pencilled in for the year to January 2019 means that the yield stands at 4.1%, while the anticipated 12.9p dividend for fiscal 2020 drives the yield to an even-better 4.8%.

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Sales performance has been a little more encouraging of late at the DIY retailer. In the UK and Ireland, aggregated like-for-like sales rose 4.6% during the three months to July, thanks largely to its B&Q business moving back into growth. And this pushed group sales on a comparable basis 1.6% higher.

In less cheery news, however, like-for-like revenues in its other key market of France continued to head downwards — albeit at a slower pace of reversal than in the prior quarter — and sales dropped 1% year-on-year.

Troubles in France’s home improvements market could continue to drag on Kingfisher’s top line, though equally worrying is the prospect that quarter two’s sales improvement in Blighty could be a flash in the pan as difficult economic conditions put more and more stress on consumer spending power.

Right now, Kingfisher trades on a cheap forward P/E ratio of 11.2 times. This isn’t low enough to encourage me to invest, though, as I consider predictions of an 11% profits rise for the current fiscal period as looking rather heady and therefore susceptible to being chopped down in the months ahead.

Taking the stage

I’d be much more content to choose Footsie broadcasting colossus ITV (LSE: ITV) instead.

Firstly, this stock boasts a lower prospective P/E ratio of 10.1 times. Secondly, last year’s 7.8p per share dividend is anticipated to jump to 8p in 2018 before rising to 8.2p next year, figures that result in giant yields of 5.1% and 5.2% respectively. And thirdly, while City brokers currently forecast a 3% earnings drop in 2018, conditions are becoming increasingly favourable for ITV as advertising spending recovers, a situation that could well push the business back into earnings expansion as early as next year.

Ad revenues rose 2% during the six months to June, but improving conditions in the ad world aren’t the only cause for celebration. I am particularly excited by the progress ITV Studios is making with revenues up by double-digit percentages in the first half. The broadcaster has pumped investment into its production arm of late and this is reflected in how popular its programming is increasingly becoming across the world. And the show pipeline looks strong, up 16% as of June to 263 new or recommissioned projects, offering ITV plenty of exceptional revenues opportunities now and in the years ahead.

In addition, its drive to become a truly multichannel broadcaster across its traditional television arena, as well as online, is setting it up nicely to latch onto the changing way we viewers absorb media. There’s plenty to celebrate at ITV right now, and I’d be happy to sell out of Kingfisher to stock up on its shares.

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

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