I’m looking for one of the best FTSE 100 dividend shares to purchase in the beginning of 2025. Listed here are two I wouldn’t contact with a bargepole subsequent month.

Land Securities

2024’s been a poor 12 months for Land Securities (LSE:LAND). Like different actual property funding trusts (REITs), its share price has slumped as investor hopes over swingeing rate of interest rises within the new 12 months have declined.

This poses a big dangers for property shares, by preserving internet asset values (NAVs) depressed and inflating borrowing prices. It’s a selected drawback for Landsec given its excessive internet debt (which was £3.6bn as of September).

On the identical time nonetheless, the Footsie agency’s monumental ahead dividend yield has caught my eye. At 7.1%, this is likely one of the largest on the UK blue-chip index.

REITs like this are sometimes high shares to purchase for a big and rising revenue. Sector guidelines state a minimum of 90% of yearly rental earnings have to be distributed by means of dividends.

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But Landsec’s a share I wouldn’t contact with a bargepole. In addition to interest-rate-related headwinds, earnings may stay below pressure because the UK economic system struggles to develop.

My largest concern, nonetheless, pertains to the structural decline of the retail business. Extra {that a} third of the agency’s portfolio contains of retail belongings like purchasing centres.

The rise of on-line purchasing, mixed with rising prices and escalating enterprise charges, imply one other robust 12 months’s in retailer for bodily retail. The Centre for Retail Analysis (CRR) thinks one other 200,000 retailers may shut in 2025 alone, leading to extra empty heaps for property homeowners to take care of.

I just like the agency’s rising deal with mixed-use city developments. This might show worthwhile over the long run as peoples’ existence steadily evolve. However on stability, the agency affords an excessive amount of threat for my liking.

Lloyds Financial institution

Lloyds (LSE:LLOY) is one other high-yielding dividend inventory I’m eager to keep away from in 2025.

On the plus aspect, I believe the FTSE share’s at the moment in fine condition to proceed paying market-beating dividends. Payout forecasts for subsequent 12 months yield 6.3%, and are protected by the financial institution’s strong CET1 capital ratio of 14.3%.

However Lloyds faces a mix of headwinds that might preserve it share price below strain in 2025. For one, the UK economic system appears to be getting into a recent downturn that might injury mortgage progress and push up credit score impairments.

On high of this, internet curiosity margins (NIMs) — which slipped to a skinny 2.94% as of September — would possibly stay in a tailspin if (as anticipated) rates of interest fall additional.

Lastly, fears over big monetary penalties may rise as a recent Monetary Conduct Authority (FCA) investigation rolls on. The present probe — which pertains to the potential mis-selling of automobile finance — may finish up costing the Black Horse Financial institution many billions, in keeping with analysts.

I’m not bothered by the enhance {that a} recovering housing market may present the financial institution. With so many high-yield UK shares to select from, I’m completely satisfied to depart Lloyds and Landsec shares on the shelf.