Yahoo Finance Buying these 3 UK blue-chips in an empty ISA would give me a £1,400 passive income
The FTSE 100 boasts some of the most exciting passive income stocks in the world. I own a heap of them, including Phoenix Group Holdings, which yields 9.84%, and Legal & General Group, which yields 8.89%.
Those are really incredible rates of income, and will look even better when base rates are finally cut and savings rates and bond yields tumble.
I like to diversify to spread the risk around, and three more tip-top FTSE 100 blue chips caught my eye today.
Top dividend play
The first is cigarette giant British American Tobacco (LSE: BATS). Personally, I don’t buy tobacco companies, but that doesn’t stop me checking them out from time to time, to see what I’m missing. In this case, it’s a bumper 9.51% yield. Better still, it’s a growing income. Let’s see what the charts say.
Chart by TradingView
Smoking may be in inexorable decline, but strong brand names like Rothmans, Dunhill, Benson and Hedges and Lucky Strike help slow the speed of descent. Alternative nicotine products like Vuse and glo may offset cigarette declines.
The stock is cheap, trading at 9.6 times earnings. Share price growth is likely to be in short supply, though. The British American share price has fallen 3.77% over the last year. It remains at the mercy of regulators. There are risks, but that income is hard to beat.
China-focused bank HSBC Holdings (LSE: HSBA) also offers a winning combination of a dirt-cheap valuation (7.44 times earnings) and a high trailing yield (7.29%). The HSBC share price is up 9.77% in a year but remains at the mercy of geopolitical events amid tensions between China and the West.
In February, it suffered a shock $3bn charge on its stake in a Chinese bank as bad loans mounted due to the country’s property slump. It still posted a 78% jump in full-year profits to £30.3bn, though. And unveiled a new $2bn share buyback.
FTSE 100 stars
The share price has dipped lately driving the yield towards an unbelievable 10%. Let’s see what the charts say.
Chart by TradingView
Finally, I’m tempted by Land Securities Group (LSE: LAND), which would give me exposure to a sector I don’t have at the moment, commercial property. It’s had a horrendous time lately, as Covid lockdowns and working from home hit retail centres and office blocks. High borrowing cost only made matters worse.
Yet when interest rates start falling, firms like LandSec could lead the recovery. That will both reduce its borrowing costs and make the group’s 6.4% yield look even juicier. Trading at 12.4 times earnings, it isn’t that expensive.
The company has made a loss in four out of the last five years, including a £341m loss in 2023. Yet its dividend track record is pretty solid, pandemic year aside. Let’s see what the charts say.
Chart by TradingView
If I split this year’s Stocks and Shares ISA allowance evenly between these three, I’d get an average yield of 7.73%. That would pay me a grand passive income of £1,467 a year.
As I said, I’d have to shun British American Tobacco. I’d replace that by buying even more shares Phoenix, which yields marginally more.
The post Buying these 3 UK blue-chips in an empty ISA would give me a £1,400 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. Harvey Jones has positions in Legal & General Group Plc and Phoenix Group Plc. The Motley Fool UK has recommended British American Tobacco P.l.c., HSBC Holdings, and Land Securities Group Plc. 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
