The FTSE 100 is a superb place to buy cut price shares, in my view. Years of underperformance — and particularly in contrast with US shares — implies that many British blue-chips look dust low cost relative to anticipated earnings, dividends, or each.

Trying forward, this probably leaves scope for higher returns, particularly as excessive valuations and rising political uncertainty tarnishes urge for food for US shares. However which of the next two Footsie shares do I feel share pickers ought to contemplate this month?

British American Tobacco

Ahead P/E ratio 9.5 occasions, dividend yield 7.3%

British American Tobacco (LSE:BATS) at present packs one of many FTSE 100’s largest dividend yields. Because of its predictable earnings and money flows, it’s capable of pay spectacular dividends yr after yr.

However does this offset the specter of additional share price declines for buyers? I feel not. British American’s share price has slumped 10% within the final decade, reflecting the tobacco trade’s regular decline.

On the plus facet, manufacturers like Fortunate Strike and Camel are serving to to restrict gross sales reversals. And this might imply extra juicy dividends for years to return.

But I’m unconvinced. In 2024, British American’s natural cigarette volumes sank 5.2% yr on yr to 518m sticks. This kind of worn out the 5.3% enchancment in price/combine over the yr.

There are additionally rising indicators that the agency’s heavyweight labels are shedding their lustre. It mentioned sturdy gross sales of deep-discounted rival merchandise additionally impacted demand for its personal sticks in 2024.

However British American hopes its smokeless merchandise like Vuse vapes and Velo nicotine pouches will choose up the slack from its declining core merchandise. It plans for “at least 50%” of group revenues will come from non-combustibles by 2035.

Nevertheless, the expansion potential of those next-gen applied sciences stays extremely unsure. Laws impacting the sale and advertising of those merchandise can be tightening throughout the globe. It’s additionally struggling to counter hovering demand for unlawful single-use e-cigs in North America (vape models dropped 5.9% in 2024 consequently).

WPP

Ahead P/E ratio 7.3 occasions, dividend yield 6.3%

Promoting company WPP‘s (LSE:WPP) share price performance has also been poor over the last decade. It’s down round 60%, and has slumped extra just lately as a result of worsening circumstances throughout its markets.

Like-for-like revenues dropped 2.7% within the first quarter, newest financials confirmed. They may stay beneath strain if extended commerce wars dampen the worldwide economic system.

However given its present low valuation — WPP’s price-to-earnings (P/E) ratio is effectively under the long-term common of 11-12 — I feel this can be a high restoration share to think about.

From a long-term perspective, there’s nonetheless quite a bit I like in regards to the communications large. Its spectacular scale (115,000 staff throughout greater than 100 international locations) places it in good condition to take advantage of an eventual market upturn.

WPP’s additionally accelerating its presence in digital advertising and synthetic intelligence (AI) to drive future development. This yr, it’s spending £300m to ramp up its WPP Open AI system, up from £250m in 2024. The enterprise estimates round 60% of its client-facing employees now use the system, up from 40% in December.

On steadiness, I feel that is the higher FTSE 100 share to take a look at at present.