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Should you buy this FTSE 100 dividend stock’s 11.5% yield for your ISA before November?

There are plenty of blue chips updating the market in early November, although I certainly wouldn’t encourage investors to buy shares in Imperial Brands (LSE: IMB) in the run-up to next month. Preliminaries are set for 4 Monday and I fear that more bad news could be on the way.

The tobacco titan’s share price toppled to its cheapest closing level since August 2009 following a shocking trading statement a month ago. Back then it halved its sales forecasts for the fiscal year to September 2019, to 2%. The downgrade was thanks in part to a challenging US vaping market that had “deteriorated considerably” in the final quarter.

I alluded to these troubles last time I covered Imperial Brands, woes which have escalated because of a stream of law changes governing the sale and usage of these next-gen products in response to fresh health fears.

And with the number of alleged vaping-related deaths and illness continuing to grow, not just in the US but all over the world, I fear that the Footsie firm’s next release could contain some chilling guidance for fiscal 2020.

11.5% yields? No thanks

One final thing: we all know about how demand for the FTSE 100 company’s traditional ignitable products is in sharp decline, too. Indeed. the terrific brand strength of labels like West and John Player Special couldn’t stop underlying volumes at the firm dropping 4.5% in the six months to March.

And I fear that Imperial Brands could shock the market on this front, too. The dwindling performance of its vapour products might have grabbed the headlines in September’s update but back then the business also advised of “tougher trading conditions” for its tobacco unit in Africa, Asia, and Australasia, providing investors with more to worry about.

Right now Imperial Brands’s share price of around £18.70 means that it carries a forward price-to-earnings (P/E) ratio of 6.4 times, well inside the accepted bargain zone of 10 times and above. But not even this is enough to tempt me to invest, nor is a gigantic corresponding dividend yield of 11.5%.

A better blue chip

I think those seeking to pick up a big-dividend paying bargain would be much better off buying Barratt Developments (LSE: BDEV) in the days ahead.

This particular Footsie stock boasts a hulking forward dividend yield of 7% while its corresponding P/E ratio of 9.3 times makes it a great pick for investors on a tight budget. And as I’ve explained before, owing to the country’s sizeable homes shortage I’m confident that it can continue generating strong earnings – and thus dividend – growth long into the future.

My faith in the housebuilder received a boost last week when it declared that it had “started our new financial year well” thanks to “a good sales rate and a healthy forward order book.”

Forward sales was up to 12,963 homes as of 13 October from 12,903 a year earlier, illustrating the underlying strength of the market and Barratt’s drive to boost volumes. Resilient home sales aren’t the only reason to buy the big cap, though, as steps to ramp up margins are also taking effect.

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Royston Wild owns shares of Barratt Developments. 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.