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Are these FTSE 100 dividend stocks top ISA buys or investment traps?

J Sainsbury (LSE: SBRY) is clearly a share that’s not for the faint of heart. The troubles of Britain’s ‘Big Four’ supermarkets have commanded plenty of column inches over the past decade as disruptors Aldi and Lidl have chipped away at their stranglehold on the food retail industry.

However, the FTSE 100 supermarket still holds great appeal for investors hunting out big dividend yields. In the current financial year (ending March 2020) Sainsbury’s boasts a chunky 5% yield, one which beats the broader blue-chip average by around half a percentage point.

Furthermore, with City analysts predicting the grocer will follow a 4% profits drop this year with a fractional rise in fiscal 2021, a low forward P/E ratio of 10.9 times might be attractive to many a contrarian investor.

I’m not one of these optimists, however. Latest trading details showed like-for-like sales (ex fuel) dropped 1% in the 28 weeks to September 21 and underlying pre-tax profits plummeted 15% year-on-year. Clearly, Sainsbury’s remains a long way off that hoped-for turnaround, and, in my opinion, remains a share to be avoided.

9% dividend yields!

Would Persimmon (LSE: PSN) be a better destination for your hard-earned investment cash instead? I certainly believe so. Times are tough for the UK’s housebuilders right now as Brexit pressures have caused national home values to broadly stagnate. But owing to the size of the country’s homes shortage, the long-term outlook for this Footsie share and its peers remains robust.

To illustrate this, a report released last week by Savills suggests  property prices will rise by 15% over the next five years. Supporting these expectations are predictions of solid earnings growth (of between 2.6% and 3%) through to 2024 and Bank of England base rates remaining at historic lows, peaking at 2% at the end of the period.

At current prices, Persimmon changes hands on a forward P/E ratio of 9.1 times, a reading which I feel undervalues the company’s robust profits picture through the next decade. With the stock also boasting a 9.6% dividend yield, I reckon it’s a brilliant buy today.

TV titan

I’d also happily stock my ISA with shares in ITV (LSE: ITV). Advertising budgets in the UK are back on the rise across the media spectrum, and this particular broadcasting giant reported ad revenues were up 1% in the third quarter and at the top end of its estimates.

It also predicted growth of between 0% and 1% in the final three months of 2019. That’s in stark contrast to the falls of earlier of the year, and leads to hopes of the business finally moving back into the black in 2020 following what are likely to be three years of consecutive earnings falls.

I’ve long lauded ITV on the back of its rising might as a global television production powerhouse, not to mention its rapid progress in new media, and reckon next year could prove a turning point in the company’s long-term earnings outlook.

A forward P/E ratio of 10.4 times represents an attractive level at which to get in on this, in my opinion, while a mighty 5.8% corresponding dividend yield provides an added sweetener.

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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.