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9 days to go! 2 FTSE 100 dividend stocks I’d avoid as ‘no deal’ Brexit draws closer

In an article yesterday, I explained why a ‘no deal’ Brexit has become ever-more likely in recent days, and discussed a great dividend share that could surge as a result.

If, like me, you’re concerned about the impact of a disorderly EU withdrawal on the political and economic landscape of the UK, then things have got even worse overnight. Reports have emerged that Theresa May will be asking for a ‘short’ extension to Article 50 only, a situation that’d likely kick the prospect of a cliff-edge Brexit just a couple of months down the road.

That’s if the club of other 27 European leaders accept any demand for an extension, that is. As things stand, the number of days left until planned departure now stands at single digits, and while there’s still plenty of politics left to be played, I think the following two stocks should be avoided in these uncertain times.

UK operations already slumping

Investing in Britain’s banking sector is a particularly risky endeavour right now. That’s not to say all of these institutions should be avoided, though. Santander and HSBC are a couple I remain bullish on because of their low exposure to the UK economy.

I’m afraid Barclays (LSE: BARC) isn’t one of those I’d tip as a buy. Its operations in the US may reduce its reliance on its home markets to generate profits but it still sources a considerable share from these shores. And this bodes badly as the implications of Brexit become ever-more concerning.

The FTSE 100 business is already suffering as the UK economy splutters. Total income at Barclays UK fell 1% quarter-on-quarter to £1.86bn in Q4 while credit impairments hit £296m, more than doubling from the prior three months and the highest level they’ve been at for years. And things could get really ugly should a hard Brexit transpire and push the country into a painful recession.

Investing in Barclays is clearly a risk too far right now and one to avoid despite its low forward P/E ratio of 7.5 times. I’m even prepared to ignore its bulky 4.5% corresponding dividend yield out of fear that its share price could sink in 2019.

Another one to avoid

I would extend this sentiment to real estate investment trust British Land (LSE: BLND). We’re all aware of the pressure the exploding e-commerce phenomenon is having on the British high street. It’s unfortunate then that the implications of Brexit on consumer confidence and spending power is adding another devastating layer of stress to the country’s shopkeepers.

Illustrating this point, latest data from the British Retail Consortium (BRC) showed retail footfall in the UK fell 1.9% last month, the 15th successive monthly drop and the worst February reading for five years. For shopping centre operator British Land this obviously signals a great cause to be worried, as does the BRC’s warning that “things could get a lot worse unless the government is able to avoid a calamitous no deal Brexit.”

I would suggest that share pickers ignore this stock’s 5.2% forward dividend yield and shop elsewhere — there’s no shortage of great income shares on the Footsie that you can pick up today, after all.

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