One turnaround stock I'd sell today for this ~5% yielder

Another trading release has prompted another heavy bout of selling over at Foxtons Group(LSE: FOXT).

The estate agency was last dealing 6% lower on Wednesday after announcing a significant drop-off in profits during 2017. With signs that the London homes market is set to continue struggling, I believe that this is unlikely to be the last frightful release from Foxtons either.

Turnaround predictions in danger?

Today the FTSE 250 business advised that group revenues slipped 11% in 2017, to £117.6m, with sales revenues having tanked 23% year-on-year to £42.6m. As a result, profits at the property powerhouse collapsed to £6.5m from £18.8m back in 2016.

In a subdued assessment of the company's performance last year, chief executive Nic Budden advised that "[while] we are pleased to have delivered a performance in line with market expectations... sales activity in the London property market is near historic lows and this had a significant impact on our overall performance in 2017."

The company suffered badly from a slump in the capital's property market as deteriorating purchaser confidence, coupled with the impact of the stamp duty changes introduced in 2016, have smacked buyer demand.

And these conditions look set to keep Foxtons under pressure for some time yet, Budden adding: "We expect trading conditions to remain challenging during 2018, and our current sales pipeline is below where it was this time last year."

So it is not hard to envision broker expectations that Foxtons would report a 9% earnings fightback in 2018, as well as a 17% bottom line increase next year, falling by the wayside. However, a huge forward P/E ratio of 28.2 times does not reflect the probability of savage slashes to profit forecasts now and beyond. I see little reason to invest in the business today.

Huge dividend yields

In fact, I would be much happier to play Britain's property market by selling out of Foxtons and buying into Telford Homes (LSE: TEF) instead.

The evaporation in consumer confidence is actually playing into the hands of Britain's housebuilders, causing existing homeowners to think twice about listing their properties, which is in turn exacerbating the supply shortage facing first-time buyers.

In this environment, demand for new-build properties continues to surge, helped by the ultra-supportive lending conditions from Britain's banks as well as the government's Help To Buy programme.

Taylor Wimpey today underlined the positive outlook for Britain's builders when it commented: "We have made a good start to 2018 and are encouraged by solid levels of demand coming into the spring selling season." It added that the fundamentals for new -build housing in the UK remain good. This is the latest in a raft of positive updates across the industry.

Against this backcloth Telford Homes is set to report earnings expansion of 28% and 18% for the periods ending March 2018 and 2019 respectively, figures that result in a mega-cheap prospective P/E ratio of 7.2 times.

To investors' delight, these projections feed through to predictions of excellent dividend growth too. So a 17p per share reward is forecast for this year and 18.8p for fiscal 2019, resulting in gigantic yields of 4.2% and 4.7% for this year and next. I reckon Telford Homes is a terrific income share to buy right now.

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Royston Wild owns shares in Taylor Wimpey. 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.