The best FTSE 100 stocks for passive retirement income
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With ageing populations around the world, innovative solutions are required to fund pensions for longer and the UK’s biggest pension manager & life insurer Legal & General (LSE: LGEN) looks set to benefit. With £1.3trn of assets under management and business in the UK, the US and Asia, revenues have been growing year on year. With the revenue growth experienced, dividend growth has followed. Legal and General now boasts an impressive 6.11% yield, an enticing prospect for this ‘passive income’-seeking investor.
The shares are currently swapping hands at £2.94, still a way off the pre-pandemic peak of £3.19 so there may also be some opportunity for share price appreciation.
The UK pensions and life assurance market is saturated with the like of Aviva, Prudential and M&G, so competition is intense, but for me, a company with a solid pedigree dating back to 1836 comforts me in my quest for a passive income.
Digging for dividends
Anglo American (LSE: AAL) looks well positioned to benefit from the huge increase in the demand for copper for use within electric vehicles as the switch to greener vehicles gathers momentum. The £37bn mining giant has interests in four copper operations in Chile and aims to develop and operate long-life, cost-efficient, socially and environmentally responsible copper mines. In the age of scrutiny, the latter is a major tick in the box.
In its half yearly results, Anglo American reaffirmed its commitment to paying out 40% of profits to shareholders. In addition to this, an extra $2bn was returned to shareholders through share buybacks and a special dividend. This all adds up to the bumper 6.54% dividend yield that investors are currently enjoying and one that is hard to ignore for passive income seekers like myself.
Although Anglo American delivers an enviable dividend, the mining sector can be fraught with its own challenges, ranging from environmental issues to volatile swings in commodity demand and pricing. It is important to remember that bumper dividend payments may not always last.
A green future
The green revolution is here to stay and the transition to net zero by 2050 will require huge investment both by private entities and governments alike. SSE looks well placed to make a significant contribution to the government’s ambitious target through its investment in electricity transmission, its onshore and offshore wind projects and hydro power.
SSE is currently trading near its 10-year all-time high, so from a capital growth perspective the shares may not offer much upside, but with a dividend of 4.88% and a policy linking dividend growth to inflation until at least 2023, this passive income seeker would be happy to let the green dividends roll in.
5 Stocks For Trying To Build Wealth After 50
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Isaac Stell has no position in any of the shares mentioned. The Motley Fool UK has recommended Prudential. 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.