FTSE shares just keep on rising! Here are 2 of my favourite for passive income

Despite FTSE shares going on a rally, this Fool still thinks some look like bargains. Here are his favourites for passive income.

| More on:
Young Asian man drinking coffee at home and looking at his phone

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.

FTSE shares can’t seem to slow down in 2024. Year to date, the FTSE 100 is up 9% while the FTSE 250 has climbed 5.4%.

While that’s impressive, it hasn’t been the case for the last few years. In fact, in recent times, investors have neglected UK shares.

Concerns about the domestic economy and its future prospects have driven people away from shopping in Britain. As such, many shares still look severely undervalued despite a strong 2024.

But as they say, every cloud has a silver lining. And in my eyes, there’s one positive I see: cheaper share prices translate to higher dividend yields.

These are my two favourite FTSE stocks for making passive income. I think investors should strongly consider buying them today.

I’ve been a shareholder in Legal & General (LSE:LGEN) for a while now. I plan to be for a very long time.

The stock seems to have missed out on the Footsie rally. Year to date, it’s down 1.8%. But I’m not complaining. That now means it yields a bulky 8.3%.

In the last decade, its payout has increased massively. Last year, it paid 20.34p per share. This year it’s predicted that will rise to 21.4p. At its current price, that puts its forward yield at 8.7%.

Legal & General meets a lot of the criteria I look for when buying a stock. Firstly, it looks cheap. It trades on 9.8 times forward earnings. That’s below the Footsie average of 11.

What’s more, it’s a business with strong brand recognition, a large customer base, and in the years to come I’d expect demand to continue to rise for its products and services.

Its share price has struggled, and this may continue in the months ahead. Ongoing economic uncertainty will no doubt negatively impact the business. For example, it can lead to customers pulling money out of funds, as has been the case previously.

But I’m happy to continue collecting my passive income as I wait for the stock to creep up in the years to come.

ITV

Switching the focus to the FTSE 250, I also love ITV (LSE:ITV). Unlike Legal & General, the stock has posted an awesome performance so far this year, rising 23%. But down 32.1% in the last five years, I reckon its share price still has plenty of room to grow.

That’s reinforced when I see the stock trading on just nine times earnings in 2025 and 7.5 times in 2026. And at 6.5%, while it doesn’t quite yield as much as Legal & General, a payout of that size is nothing to scoff at.

Last year it paid out 5p per share. Management has stated that in the medium term, it intends to keep growing the dividend and returning value to shareholders.

The largest threat to the business is a weakened traditional advertising market. Due to inflation, companies have cut back on TV spending.

However, ITV is diversifying to counteract this by putting more focus on its digital revenues, which it plans to grow to £750m, from £490m last year, by 2026.

As with Legal & General, I think its share price will keep rising in the years ahead. I’ll continue to collect passive income in the meantime.

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.

Charlie Keough has positions in ITV and Legal & General Group Plc. The Motley Fool UK has recommended ITV. 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

Investing Articles

£20,000 in savings? Here’s how I’d target a £2,219 monthly passive income with FTSE 100 shares

Investing in FTSE 100 shares can be a great way to turn a regular investment into a life-changing passive income…

Read more »

Investing Articles

These are the most popular 2024 Stocks and Shares ISA picks so far

After a few tough years, it looks like the 2024 Stocks and Shares ISA season is getting off to a…

Read more »

Investing Articles

This FTSE 100 ETF may be the simplest way to become a stock market millionaire

Ben McPoland considers one very straightforward stock market investing strategy that could lead to a million-pound portfolio.

Read more »

Investing Articles

I’d buy 11,220 Legal & General shares for £200 a month in passive income

Our writer considers how much money investors would have to put into Legal & General (LON:LGEN) shares to target £2,400…

Read more »

Fireworks display in the shape of willow at Newcastle, Co. Down , Northern Ireland at Halloween.
Investing Articles

These 2 magnificent FTSE 250 shares are on sale right now!

These FTSE 250 companies still look cheap, despite recent share price gains. Here's why our writer Royston Wild thinks they’re…

Read more »

Blue NIO sports car in Oslo showroom
Growth Shares

Down 36% in 2024, how low could NIO shares go?

The electric vehicle sector has seen some tremendous volatility in recent years, but what does the future hold for NIO…

Read more »

Shot of a senior man drinking coffee and looking thoughtfully out of a window
Investing Articles

£5,000 in savings? Here is how I would invest in income shares

This Fool has been searching for ways to generate a passive return via income shares.

Read more »

Market Movers

The Keywords Studios share price just jumped 63%. Time to sell?

The Keywords Studios share price has soared on the back of takeover talk. Here, Edward Sheldon explains what he’d do…

Read more »