Two dirt-cheap 5%+ yielding FTSE 100 dividend stocks I would buy today, and one I would sell

I sincerely believe that investors scouring the FTSE 100 for brilliant dividend shares that don’t cost the earth need to give TUI Travel(LSE: TUI) close attention.

The holiday organiser sports a prospective P/E reading of 10.3 times, a figure that is within spitting distance of the accepted bargain territory of 10 times and below. And its corresponding dividend yield sits at 5.6%, around twice the current level of inflation in the UK.

The sell-off that has smacked stock indexes in recent weeks presents a prime opportunity for dip buyers to nip in and grab this blue-chip star. I like the steps it has taken to improve the ranges of cruises and hotels that it offers and, supported by solid economic conditions in the majority of its markets, I am confident that these steps should permit it to continue generating brilliant earnings growth beyond the 10% rise it has forecast for the fiscal year just passed (to September 2018).

Out of fashion

Marks & Spencer (LSE: MKS) is another gigantic yielder from the FTSE 100, but in this case I believe that existing investors need to sell up immediately. With half-year numbers slated for November 7 I think its share price could be set for another terrific whack following on from the worrying market update of June.

City analysts believe that Marks & Sparks will keep the dividend locked at 18.7p per share for the fiscal year to March 2019, but I’m certainly not this optimistic.

The stress on its balance sheet remains colossal, net debt sitting at £1.8bn as of March. And the stresses created by evaporating consumer spending power and intense competition don’t convince me that it can break out of its earnings tailspin any time soon (a further 6% drop is predicted for this year, incidentally). I don’t care about its 6.5% yield. I’d sell out of Marks & Spencer in a heartbeat.

Yields of close to 11%!

In fact, I think the clever money will flow out of the embattled retailer and into Persimmon(LSE: PSN) in the coming sessions. The housing giant is itself set to release trading details of its own on November 7 , and I reckon this could provide the fuel for some fresh buying activity.

The Footie firm’s dirt-cheap forward P/E ratio of 7.9 times certainly leaves enough scope for a hefty re-rating. And if its last set of financials in August is anything to go by, I’m expecting nothing more than another hugely positive release.

Back then Persimmon advised that it had “continued to experience good levels of customer interest,” despite the typically-quieter summer months, and it lauded the strength of its forward sales book that it predicted would underpin a strong second half of the year. Given the spate of positive releases coming out of the housebuilding sector of late, I’m expecting nothing than yet another positive release next week.

Right now the builder carries a staggering forward dividend yield of 10.8%. This, allied with that low, low valuation, makes Persimmon a great blue-chip to buy right now, I believe.

You Really Could Make A Million

Of course, picking the right shares and the strategy to be successful in the stock market isn't easy. But you can get ahead of the herd by reading the Motley Fool's FREE guide, "10 Steps To Making A Million In The Market".

The Motley Fool's experts show how a seven-figure-sum stock portfolio is within the reach of many ordinary investors in this straightforward step-by-step guide. Simply click here for your free copy.

Royston Wild 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.