I’m constantly on the hunt for FTSE 100 shares that can generate a stream of passive income to build my wealth and I’m sorely tempted by the following two. The first I’ve had on my watchlist for ages, the second I’ve shunned but now think could offer an exciting opportunity.
With yields of 7.35% and 5.72% respectively, they offer plenty of potential income. Should I grab them today or wait?
Shopping for shares in Spring
I really should have bought insurer Aviva (LSE: AV) by now. The one thing putting me off is that its share price never looks like doing much. It hasn’t even been moved by the recent FTSE 100 recovery. Over one year, it is up just 2.5%. Over five, it is down 15%.
That’s not a dealbreaker, especially since it has enjoyed pockets of strong performance (depending on where I measure it from). After all, it’s the income I’m after, and that 7.35% yield is a beauty.
Aviva also announced a £300m share buyback last month, after operation profits jumped 35% to £2.2bn. Although personally, I prefer to receive my shareholder rewards in the shape of dividends.
Recent dividends have been patchy, with payouts ranging from 51.94p in 2019 to 16.76p in 2021, then 31p last year. But the forecast field is attractive at 7.9%, and it’s covered 1.7 times by earnings.
The next year could be a bit sticky, as Aviva has to pass on inflationary increases in general insurance costs to customers – not easy in a competitive market – while volatile stock markets may threaten inflows at fund arm Aviva Investors.
Given my low share price growth expectations, I would rather buy Aviva when the share price is down. Rather than rush to buy it in May, I’ll wait for a dip then swoop. I can’t resist that 7%+ dividend much longer.
It’s a long time since I’ve looked at real estate investment trust British Land (LSE: BLND). Commercial property is on the frontline of three brutal trends: the rise of ecommerce, the shift to home working and the cost-of-living crisis. It just looked too risky.
British Land shares have crashed 24.35% over one year and 41.98% over five. Ouch. They missed the recent recovery, too. It’s now cheap as chips, trading at just 3.7 times earnings, and I’m wondering if that’s too good to miss.
The property developer posted a £319m loss in 2019, while the next two years saw losses of more than £1bn. 2022 was brighter, though, as British Land finally posted a profit and a pretty decent one of £958m. It also lifted its dividend from 15.04p to 21.92p.
Its last set of results, published back in November, showed a 13.3% jump in first-half profits to £136m, driven by rental income growth and cost control.
British Land still faces a heap of challenges, but with the UK potentially escaping a recession, brighter times could lie ahead. When investor sentiment swings, its shares could recover some of their lost value, but I’ll have to be patient. That could take time but I’ll keep reinvesting my 5.7% yield to build up my stake.
I’m now slapping British Land on my watchlist with the aim of buying in May, ideally, while it’s still dirt cheap.
