One of the biggest losers of the 2020 economic downturn has been Lloyds Banking Group (LSE:LLOY). Right now I’m still skeptical about the Lloyds share price. I would rather look to build a passive income through FTSE stocks.
In order to achieve a passive income, dividend investing is the way to go. In short, buying stakes in companies that allocate a proportion of their profits to shareholders. This can be a profitable way to increase wealth over time if these regular payments are allowed to compound over time.
Lloyds share price woes
The Big Four banks have all suffered huge loan losses. To cover these losses, all of them have had to set aside billions in loss reserves. As I write this, LLOY sits in the 90’s among the FTSE 100 members for price performance over the last 12 months. Since the beginning of 2020, LLOY’s shares have fallen nearly 45%. Trading for 60p per share on 4 January 2020, shares are currently trading for a paltry 34p. Shares even tumbled to as low as 23p back in September.
Despite a 2020 to forget for Lloyds, it is worth noting it is still one of the Big Four banks in the UK and boasts close to 30m customers. There is still a potential for recovery. The Covid-19 vaccine is being rolled out as well as the fact LLOY does have a decent balance sheet. It is in a position to benefit if and when an economic rebound occurs. However, due to economic uncertainty and external factors, I am currently avoiding the Lloyds share price.
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FTSE 250 passive income opportunity
I believe there are bargain dividend payers throughout the FTSE. One I really like the look of right now is Britvic (LSE:BVIC). BVIC is the largest supplier of branded still soft drinks in the UK. It also has operations in Ireland, France, and Brazil. Some of its brands include Tango, Robinsons, and J20. In an exclusive agreement with PepsiCo, Britvic also produces and sells brands such as Pepsi and 7UP.
While the Lloyds share price was taking a battering, BVIC’s share price was slowly recovering towards pre-crash levels. BVIC’s share price is still down marginally from this time last year which I believe makes it more enticing and offers room for growth. Right now I can buy shares for 755p per share which is still approximately 15% less than January 2020.
One of the driving factors behind my admiration for BVIC has been its consistent results and propensity to grow. At the end of November, it announced full-year results. The main headlines were an almost 17% increase in profit. Ultimately this meant BVIC confirmed a 21.6p dividend for the full year which gives it a yield of close to 3%. Additionally, BVIC announced it extended its UK bottling deal with PepsiCo for another 20 years which is a big coup.
Despite the economic downturn which consumed the FTSE, I see the soft drinks industry bouncing back nicely. With that in mind, I believe BVIC could increase its dividend payout in the future. If analysts are correct, BVIC’s yield could surpass the 3% mark in the new financial year which makes it even more tempting. I’m going to continue to avoid the Lloyds share price and instead look at other alternatives for 2021 and beyond.
The post I’d avoid the Lloyds share price. I think this FTSE stock can make me a passive income instead appeared first on The Motley Fool UK.
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Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended Britvic and Lloyds Banking Group. 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 2021