2 FTSE income stocks investors should consider buying in April

Income stocks are a great way to build wealth. Our writer details two picks she believes investors should consider snapping up.

| More on:
Smart young brown businesswoman working from home on a laptop

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.

Regular dividends from quality FTSE income stocks can help boost wealth, and even create an additional income in some cases.

Two stocks investors should consider buying are Rio Tinto (LSE: RIO) and Shell (LSE: SHEL).

Here’s why!

Mining giant

Rio Tinto is one of the world’s biggest mining businesses. As commodity stocks are linked to the global economy, it won’t come as a surprise to see the Rio share price meandered up and down during the past 12-months.

The shares are down 5% over a 12-month period from 5,232p at this time last year, to current levels of 4,926p.

Ongoing economic and geopolitical volatility are risks that have held the shares back. For example, a stalling Chinese economy has hurt demand for metals, sales, and performance levels.

Other issues elsewhere, including rampant inflation and higher interest rates in the US, have meant performance has been dented too. I’ll keep an eye on this. However, this cyclical nature is something to bear in mind with all mining stocks.

The biggest mining firms in the world are at the mercy of the cyclical nature of mining. However, they’re also much better equipped to deal with it, and still offer shareholder value.

For example, Rio shares look very attractive on a forward price-to-earnings ratio of just eight. If volatility cools, the shares could head upwards, so now could be a good time to act.

Moving on, a forecast dividend yield of just under 7.5% for 2024 is extremely enticing, and blows the FTSE 100 average of 3.8% out of the water. However, dividends are never guaranteed.

For me, Rio is an example of a business that will flourish further when the economic picture is better. Plus, it’s still well-equipped to deal with current turbulence. Its wide presence, track record, cash rich balance sheet, and future prospects are bright, if you ask me.

Oil giant

Similar to Rio’s dominant market position, Shell is one of the largest oil firms on the planet.

The shares are up 18% over a 12-month period from 2,232p at this time last year, to current levels of 2,648p.

I reckon this rise is in part due to increased demand due to an increase in energy values. However, another similarity to Rio is the fact that Shell is also averse to cyclical issues. The fate of the firm is also linked to the global economic outlook. This can hurt performance and returns. However, a bigger risk I’m worried about in the longer term is the transition away from fossil fuels, and towards greener alternatives.

From a bullish view, the shares offer a yield of 4.5%, and it looks well covered.

Furthermore, the business does have its own green strategy to capitalise on the green revolution in the years ahead. However, it has recently scaled back its ambitions which is something I’ll keep an eye on.

The use of traditional fossil fuels and demand levels won’t disappear overnight. Plus, the transition to renewable energy could take decades to complete. There’s plenty of time for Shell to reward investors, and help build long-term wealth, if you ask me.

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.

Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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

Young Caucasian woman holding up four fingers
Investing Articles

7%+ dividend yields! 4 FTSE 100 shares for investors to consider buying in April

These FTSE shares offer dividend yields comfortably above the index average of 3.7%. Here's why they could be good passive…

Read more »

Dividend Shares

£10k in an ISA? Here’s how to generate a ton of passive income

Passive income can provide a lot more financial freedom and security. Here’s an easy way to generate some within an…

Read more »

Investing Articles

The Aviva dividend yield’s already over 7%. Could it go higher?

Christopher Ruane explains why he thinks the Aviva dividend could be on course to grow this year and beyond. Might…

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

2 shares I’d buy to try and double my money in 10 years

Stephen Wright thinks there are still opportunities to to buy UK shares that can double in value over the next…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

NIO stock has crashed! Here’s why I still wouldn’t touch it with a bargepole

I've been watching NIO stock falling heavily, and wondering when might be a good time to get in cheaply. Here's…

Read more »

Investing Articles

Why have Rolls-Royce shares fallen this week?

Rolls-Royce shares remain the best performing on the FTSE 100 over the past year, but there's been some pullback. Dr…

Read more »

Investing Articles

With a 4.3% yield, I consider this FTSE company an exceptional investment

Oliver Rodzianko say this FTSE company is focused on quality and long-term survival. As such, he thinks he'll hold it…

Read more »

Investing Articles

How I’d invest £10,000 in a Stocks & Shares ISA and aim for a £45,500 second income

Millions of us aren’t earning the second income we deserve. Here, Dr James Fox explains how he’d get his savings…

Read more »