Yahoo Finance 2 of my most amazing buys from the FTSE 100 for passive income
The FTSE 100 has posted a brilliant performance in 2024 so far. But I don’t target shares from the UK-leading index just for rising share prices. I also love the passive income opportunities it provides.
Footsie stocks offer some of the bulkiest yields out there. Its average yield is 3.9%. That comfortably trumps the S&P 500, which clocks in at just 1.4%.
As such, I hold a number of FTSE 100 income stocks in my portfolio. I reckon these two could be the best I own. I think investors should strongly consider buying them today.
HSBC
Let’s kick off with HSBC (LSE: HSBA). The stock’s made a strong start to the year. During that time, it’s risen 9.9%, outperforming the wider index (7.6%).
I bought shares in the international bank back in February when its share price dipped following the release of its full-year results. Today, I’m sitting on a healthy 15.6% paper gain.
What drew me in the most was its 7% yield. The business has adopted a progressive policy dividend in the last few years and its actions like that I look for when buying companies. Last year, its payout jumped from 31 cents per share to 61 cents.
In its first update of 2024, it announced a special 21 cents per share dividend following the sale of its Canadian business. Taking that into consideration, it currently yields a whopping 11.8%.
It wasn’t only the perspective income that enticed me. The stock looks cheap. It trades on just 7.6 times earnings.
The biggest risk to its share price is its exposure to China. An unstable property market will impact HSBC. We saw this last year.
However, it’s earmarked over $6bn to invest in fast-growing Asian countries. In the long run, I think its focus on the region will pay dividends.
Legal & General
Next up is Legal & General (LSE: LGEN). It hasn’t performed quite as well as HSBC, falling 1.3% so far in 2024. But that means its shares are trading on just below 10 times forward earnings. And I think that could be a steal.
But the star of the show is its 8% yield. That’s more than double the Footsie average. Since 2019, dividends per share have grown at an impressive rate of 19%. This year, management intends to increase its payout by 5%. That puts its forward yield at 8.5%.
2023 proved to be difficult for the business and 2024 looks like it’ll be similar. Operating profit took a hit as well as its assets under management as investors put their money into safer investments, such as bonds.
But I like the look of Legal & General shares today. With factors such as an ageing UK population, I think it stands in good stead to perform strongly in the years to come.
Between now and 2039, the number of people aged 75 and over in the UK is expected to double. For a company like Legal & General, which is already a leader in areas such as the Pension Risk Transfer market, this bodes well for its prospects.
As such, analysts have the firm growing its earnings by over 20% a year to the end of 2026.
The post 2 of my most amazing buys from the FTSE 100 for passive income appeared first on The Motley Fool UK.
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HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Charlie Keough has positions in HSBC Holdings and Legal & General Group Plc. The Motley Fool UK has recommended HSBC Holdings. 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.
Motley Fool UK 2024
