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9.2% dividend yields! Should I buy these FTSE 100 shares?

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Scene depicting the City of London, home of the FTSE 100
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I own FTSE 100 housebuilders Barratt Developments and Taylor Wimpey shares in my Stocks and Shares ISA. So news today that house prices unexpectedly sped up again in August, rising 11% annually versus the 10.5% recorded in the prior month, came as music to my ears.

The aforementioned firms first appealed to me because of their historically-generous dividend yields. But on this front, I believe The Berkeley Group (LSE: BKG) could be a better buy today. This FTSE 100 firm’s yield for this financial year sits at a handsome 5.8%.

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Berkeley specialises in building homes in London and the southeast of England. These are historically-strong regions for the property market. However, there are growing signs the capital in particular is losing its lustre for homebuyers as people seek more living (and garden) space following Covid-19. The rise of flexible working might also weigh on home price growth in London — and by extension, earnings at Berkeley — as regular trips to the office come under threat.

At the moment though, London still retains its age-old position a very-attractive place for many people to live. This is reflected by Berkeley’s robust forward sales of £1.7bn as of April. And it’s why the FTSE 100 firm opened seven new construction sites in London in the last fiscal year alone. I think this UK share remains a great buy for an income investor like me.

Hand holding pound notes

A risk too far for FTSE 100 investors?

The forward yield over at Imperial Brands (LSE: IMB) also looks mightily attractive on paper. At 9.2%, this beats the broader FTSE 100 average of 3.4% to a pulp.

That yield might be better than Berkeley Group’s, but Imperial Brands is a UK dividend share I won’t touch with a bargepole. Fans of the business will point to the growth potential of products like e-cigarettes that could ignite profits growth. Big Tobacco hopes products like this could be a silver bullet for their woes as people seek healthier ways to get their nicotine fix.

However, I’m yet to be convinced as lawmakers take steps to clamp down on the use, marketing and sale of these non-combustible products. The sorts of measures that have smacked traditional tobacco revenues over the past decade.

Latest news here shows rising pressure on UK legislators to stop e-cigs being marketed in a way that appeals to children. A raft of data suggesting that vaping also creates significant health risk isn’t helping Imperial Brands on this front either.

Some would argue that Imperial Brands’ risks are baked in at its current price of £15.50 per share. This is because the tobacco titan trades on a forward price-to-earnings (P/E) ratio of 6 times. However, that low valuation still isn’t enough to encourage me to invest.

Imperial Brands’ share price has slumped 60% over the past five years as the regulatory pressure facing its traditional product lines have spread to its next-generation technologies. I’d rather buy lower-risk FTSE 100 stocks today.

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Royston Wild owns shares of Barratt Developments and Taylor Wimpey. The Motley Fool UK has recommended Imperial Brands. 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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