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A FTSE 100 dividend stock I’d buy over this 8% yielder

I’ve always had great faith in Moss Bros Group’s (LSE: MOSB) ability to circumvent the broader pressures damaging the broader retail sector.

Up until recently I was confident the outfitter would be able to keep revenues on an upward keel on the back of its successful e-commerce strategy that has seen internet sales boom, as well as the impact of its store refitting programme that has worked a treat in dragging punters through the doors.

However, the FTSE 250 business shook lower at the start of the year after a disappointing Christmas period in which lower footfall than it had previously anticipated forced it to issue a shock profit warning.

And Moss Bros was at it again in March, warning that high pressure on customers’ wallets — along with the disruption resulting from “stock shortages caused by the consolidation of key suppliers” — would see profits fall short of estimates.

In response to what it called “the more challenging trading environment,” Moss Bros took the drastic step of cutting the full-year dividend for the period ending January 20187 to 1.97p per share from 3.98p a year earlier. This meant the total payout for last year slumped by almost a third to 4p per share.

Suiter slumps

The net effect of these chilling updates is that the retailer has seen its share price almost halve in the space of less than three months. However, I wouldn’t consider this to be a sound dip buying opportunity.

I have faith that Moss Bros’s investment in cyberspace and in its store network will build the foundations for decent revenues growth in the long term. The ‘suiter and booter’ is a reputable name in the field of selling and renting out smart men’s fashion, and this should help it to ride out the current storm.

But right now I believe the retail maelstrom taking bites out of the high street’s biggest retailer’s could send Moss Bros’s stock value shuttling even lower, as could predictions that the aforementioned supply problems be solved by late spring.

City estimates are currently suggesting a 47% earnings drop in fiscal 2019, reflecting these tough conditions, and yet brokers are still expecting the dividend to be held at 4p. Given the probability of this estimate being hacked down, I believe share pickers should pay little attention to the company’s gigantic 8.3% yield.

TV star

ITV (LSE: ITV) is another big-yielding share that has endured plenty of revenues pain recently thanks to slumping advertising budgets.

But I would be far happier to splash the cash on the FTSE 100 broadcasting behemoth today, and not just because of its dirt-cheap forward P/E ratio of 9.4 times (which comes as stark contrast to Moss Bros’s higher corresponding reading of 17.3 times).

This low reading provides decent protection against a share price collapse should the predicted 4% earnings slide for 2018 increase in the months ahead. And what’s more, this is a great level at which to latch on to the brilliant long-term growth opportunities afforded by ITV’s global expansion drive and successful move into new media.

What’s more, an expected dividend of 8p per share — a figure that yields an impressive 5.5% — stands on stronger footing than the projected reward over at Moss Bros. ITV is a share I would happily buy today and stash away for the years ahead.

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