Thinking of investing in buy-to-let? Buying FTSE 100 dividend share BT may be a better idea

While the continued growth in property prices makes a buy-to-let appealing for the long term, a number of FTSE 100 shares offer high income returns. One example is BT (LSE: BT.A). The company has a dividend yield of around 6.9% at the present time, which is likely to be higher than the income returns available on the vast majority of properties across the UK.

Of course, BT is not the only stock which has a high yield. Reporting on Friday was a FTSE 250 share that could deliver an impressive income return in the long run. As such, it could also be a better investment than a buy-to-let property.

Acquisition prospects

The company in question is real estate investment trust (REIT) Assura(LSE: AGR). The investor in primary care properties announced details of three further acquisitions that have been made for a combined consideration of £50m. This takes the company’s year-to-date spending on acquisitions to £158m, comprising 42 medical centres. They have a passing rent roll of £7.7m and a weighted unexpired lease term of 14.2 years.

The acquisitions include one of the largest primary healthcare facilities in the UK, Stratford Healthcare Centre in Stratford-Upon-Avon. It is a central hub for the provision of local healthcare services, and includes a variety of healthcare-related services.

With Assura having a dividend yield of 4.6%, it appears to offer strong income prospects. Given the nature of its business, it could also provide relatively stable returns over a long period. With the reliability of a dividend being of high importance to many income investors, it could therefore be a relatively appealing dividend share for the long term.

Undervalued share

As mentioned, BT has a dividend yield of around 6.9% at the present time. Since it is covered 1.6 times by profit, it appears to be affordable. Certainly, the financial performance of the business has continued to disappoint. The company does not yet appear to have found its feet in what is an increasingly competitive quad-play industry. A number of rivals are expanding their services, and with the company having recently refreshed its strategy, it still seems to be working out how to make its enlarged business more profitable following the purchase of EE and the investment in pay-TV.

Of course, the job of generating improving financial performance is set to be tasked to a new CEO. This could act as a catalyst on the company’s operational and financial performance. Given its strong position in a variety of markets, though, it seems likely that the right growth plan will be found. And, with BT shares having a price-to-earnings (P/E) ratio of 9.5, they could offer high returns in the long run.

As such, and while still relatively risky, the stock could be a stronger income investment opportunity than a buy-to-let property. It appears to have sound recovery potential, as well as a high dividend yield.

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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.

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