I already own these FTSE 100 stocks in my investment portfolio. And right now I’m considering adding to my holdings. Here’s a brief explanation why.
Bunzl
Support services business Bunzl (LSE:BNZL) is one of the core holdings in my Stocks and Shares ISA. I bought it for long-term passive income and today’s full-year update illustrates why.
You see the business announced it was lifting the annual dividend for an astonishing 30th year in a row. In fact the total dividend for 2022 leapt an impressive 10% to 62.7p per share.
Bunzl is a cash-generating machine. This gives it the means to raise dividends year after year and to also reinvest for growth. An ambitious and well-executed acquisition strategy has provided the profits progression to give its generous dividend policy even more fuel.
Revenues in 2022 rose an impressive 9.8% last year thanks in part to acquisitions, to £12bn. This in turn blew pre-tax profit 11.6% higher to £634.6m.
Encouragingly for investors like me, Bunzl has no intention of changing its recipe for success, either. Today the business announced two further acquisitions: German online workwear and PPE distributor Arbeitsschutz-Express, and Canada’s foodservice, cleaning, and hygiene product specialist Capital Paper.
Dividend yields at Bunzl admittedly aren’t the biggest. For 2023, the company carries a reading of 2.2%, below the FTSE 100 average of 3.5%.
However, the firm’s commitment to strong dividend growth allows investors to combat the problem of inflation. This is what I think makes it a great buy for long-term passive income.
Persimmon
Housebuilder Persimmon (LSE:PSN) is another blue-chip share I bought for its dividends. Payouts are tipped to fall here in 2023 as the housing market cools. Yet today the yield still sits at an impressive 8.6%.
That said, I’m not going to add to my Persimmon shares just yet. This is because of the huge uncertainty over homes demand in the short-to-medium term. The cloud that consequently hangs over the company’s dividend forecasts mean there may be better high-yield shares for me to buy today.
Latest data from Nationwide showed home prices fall for the fifth month in a row. The decline in homebuyer appetite could persist too if interest rates keep climbing and buyer affordability remains under pressure.
Yet I retain a positive view on Persimmon as a long-term investor. And if it becomes clear that a full-blown property market crash can be averted I’ll add more of its shares to my portfolio.
Woeful attempts to kickstart property construction fed the home price boom of the last decade. Britain has a colossal shortage of new homes and this shortfall looks set to endure, meaning the builders should continue commanding a premium price for their product.
The Home Builders Federation says that just 120,000 new homes a year are on course to be built due to government policy. This would be far short of an official target of 300,000 and worsen the supply and demand imbalance.
I plan to hold my Persimmon shares, like my Bunzl shares, long into the future.
