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Two 5%-yielding FTSE 100 dividend stocks at rock-bottom prices I’d buy in an ISA today

With the FTSE 100 having fallen by over 5% in the last week, now could be a good time to buy stocks that are trading on low valuations. After all, buying high-quality shares while they trade at low prices has historically been a successful means of generating high returns.

Clearly, there is scope for further uncertainty across the FTSE 100. However, periods of decline can produce strong buying opportunities for long-term investors.

With that in mind, here are two large-cap shares that appear to offer good value for money alongside their 5%+ dividend yields. They could be worth buying in an ISA today.

Sainsbury’s

The recent update from J Sainsbury (LSE: SBRY) showed that trading conditions are tough for UK supermarkets. Its like-for-like sales declined by 0.2%, while its potential to produce higher growth rates in the near term appears to be limited.

However, the uncertainty facing the business appears to have been factored in by investors. The stock currently trades on a price-to-earnings (P/E) ratio of 10, while investor sentiment has improved of late. For example, the stock has gained over 10% in the last two months.

Despite its recent rise, Sainsbury’s offers a dividend yield of around 5%. Its plans to rationalise its store estate and cut debt could enhance its financial prospects and lead to dividend growth over the long run. This may catalyse investor sentiment in the stock and help it to produce further capital growth over the coming years.

Certainly, investing in retail shares carries a relatively high degree of risk at the present time due to a competitive marketplace and weak consumer sentiment. But Sainsbury’s low valuation and impressive yield could signify that the stock has long-term investment potential.

St. James’s Place

The recent performance of wealth manager St. James’s Place (LSE: STJ) has been negatively impacted by wider economic uncertainty. For example, its most recent results showed a decline in gross new inflows of 7% versus the same period of the previous year.

Looking ahead, the uncertainty facing the UK and world economy could continue. This may lead to a period of more challenging operating conditions across the wider wealth management industry, which may produce a volatile period for the company’s shares.

Despite this, St. James’s Place could offer long-term investment appeal. Following its 18% share price decline over the last three months, the stock now trades on a price-to-earnings growth (PEG) ratio of just 0.5. Alongside its dividend yield of over 5%, this suggests that the company’s total returns could prove to be highly appealing over the long run.

Since the company operates in a highly cyclical industry, current uncertainty and short-term risk may present a buying opportunity. With the company having a strong position in what appears to be a favourable wider wealth management marketplace, its investment appeal seems to be high.

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Peter Stephens 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.