2 FTSE 100 shares I’d buy for lifelong passive income!

These FTSE 100 shares have proved to be excellent dividend stocks for many years. Here’s why I think they’ll continue to be brilliant income generators.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Black father holding daughter in a field of cows

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The following FTSE 100 dividend stocks offer yields comfortably above the 3.7% index average. Here’s why I’d buy them to target exceptional long-term passive income.

A beaten-down bargain

The UK housing market has remained resilient despite rising interest rates. But there’s still a danger that housebuyer demand could sink, as data today from Rightmove suggests.

The property listings giant says that the average home price has slipped 1.3% month over month. Importantly this is the first monthly drop so far in 2022.

But is this an anomaly rather than a new trend? I can’t be sure though I believe the answer could be yes. So I think that businesses like homebuilder Taylor Wimpey (LSE: TW) will remain solid dividend stocks to buy.

In fact most reports show that home prices are still rising sharply. A survey from the Royal Institution of Chartered Surveyors last week in fact showed that almost two-thirds of estate agents continue to see prices increasing.

Then there’s the steady flow of positive trading updates from the London Stock Exchange’s collection of homebuilders.

Safe as houses

Taylor Wimpey’s share price124.9p
Price movement in 2022-29%
Market cap£4.4bn
Forward price-to-earnings (P/E) ratio6.4 times
Forward dividend yield7.3%
Dividend cover2.1 times

Taylor Wimpey itself said in early August that it expects full-year results to be around the top end of expectations. It commented that “housing market fundamentals remain positive” thanks to “an enduring supply and demand imbalance and good availability of attractively priced mortgages”.

Encouragingly for Taylor Wimpey, I’m expecting this imbalance to endure for years to come, too. There’s no sign that ineffective housing policy over the past two decades will be overhauled. And factors like population growth and intensifying mortgage market competition should continue driving demand.

In the process, I’m expecting profits at Taylor Wimpey to rise strongly, preserving its role as a top stock for passive income.

Betting on Asia

Meanwhile, I believe HSBC Holdings (LSE: HSBA) could see earnings soar thanks to explosive GDP growth in emerging markets.

The FTSE 100 bank is a major player in Asia. In fact, following the height of the pandemic it announced plans to launch a $6bn multi-year investment programme on the continent to boost its position still further.

It’s lessening spending in its developed territories and pivoting towards Asian customers, a move it predicts will deliver “double-digit growth”.

HSBC’s share price544.5p
Price movement in 2022+19%
Market cap£109.9bn
Forward price-to-earnings (P/E) ratio8.5 times
Forward dividend yield4.4%
Dividend cover2.7 times

This is unsurprising given the rate at which banking demand is growing. Forecasts from GMD Research tip the Asian mobile banking sector, for example, to grow more than 18% a year between now and 2030.

HSBC will have to navigate rising competition to fully capitalise on its opportunity. But on balance I think the bank has the clout and the brand recognition to thrive, and to deliver excellent shareholder returns in the process.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has positions in Taylor Wimpey. The Motley Fool UK has recommended HSBC Holdings and Rightmove. 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.

More on Investing Articles

Black father holding daughter in a field of cows
Investing Articles

A FTSE 100 share that could create generational wealth

Investing in FTSE shares can help individuals pass down a significant chunk of cash to their children and grandchildren, data…

Read more »

Investing Articles

Here’s what the BT share price could mean for passive income investors

The BT share price has been falling for years, but that might be about to change. And dividends could be…

Read more »

Investing Articles

At £4.76, is the Aviva share price a steal? Here’s what the charts say!

Aviva has outperformed the Footsie over the last year. But is there still value in its share price? This Fool…

Read more »

Photo of a man going through financial problems
Investing Articles

Does a 43% price drop make this undervalued UK stalwart one of the best cheap shares to buy now?

After losing a third of its value of the past five years, this might be one of the most undervalued…

Read more »

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.
Investing Articles

My top 3 picks today for a £20,000 Stocks and Shares ISA

Here are three very different investments to consider for a Stocks and Shares ISA, covering both the UK and US…

Read more »

Businesswoman calculating finances in an office
Investing Articles

The Darktrace share price has been surging — and it could climb higher

I think the Darktrace share price could have more room to run. Despite the competitive AI industry, the firm looks…

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

With its 7% dividend, should I be watching the Aviva share price?

Dividend investors will struggle to find many companies with a yield above 7%, so should the Aviva share price be…

Read more »

Investing Articles

Could this be one of the FTSE 100’s best cheap dividend shares?

Looking for the best dividend growth shares to buy? Our writer Royston Wild thinks this FTSE 100 housebuilder might well…

Read more »