5 FTSE 100 shares to consider buying for passive income right now

The FTSE 100 is having its best start to the year for ages, and that’s pushing the top dividend yields down a bit. But it’s not too late.

| More on:

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.

I hate to tempt fate, but the FTSE 100 has been solidly above 8,000 points for nearly a month now.

That means some of its top dividend yields have dropped a bit. But I still see nice fat ones that I could line up for some long-term passive income.

These five might be my favourite dividend stock buys right now, on the following forecasts.

StockRecent
price
Dividend
2024
Dividend
2025
Dividend
2026
Phoenix Group Holdings508p10.4%10.8%11.0%
British American Tobacco2,460p9.5%9.9%10.4%
Taylor Wimpey148p6.4%6.5%6.5%
BT Group131p6.1%6.4%6.4%
NatWest Group (LSE: NWG)314p5.4%5.6%6.0%
Average yield7.6%7.8%8.1%
(Sources: Yahoo!, MarketScreener)

Passive income

Those are cracking yields, even with the FTSE 100 on a 2024 surge. I think our top Footsie share prices could still have a fair way to go.

And I wonder if 2024 could turn out to be one of the best years to buy income stocks in a decade.

Taking home an annual 7.6% would be nice. But even better, reinvesting the money in new shares each year could help us build up a nice big pot by retirement time.

The best bank

As the months go by, my take on the best value bank stock changes. That’s inevitable as share prices move, and the outlook varies. And at the moment, it’s NatWest.

HSBC Holdings offers a bigger dividend, but I don’t want any China risk. Of the rest, NatWest’s dividend looks best to me, and the stock valuation is low too.

Also, the government is winding down its holding, taken on when the bank was known as Royal Bank of Scotland and was in need of a bailout.

When that’s all sold, and NatWest is again fully in free market hands, I think the share price might get an extra boost. But as it is, I hold Lloyds Banking Group, and I don’t want to add another bank just yet.

Finance risk

I have Phoenix Group in my list too, so I’m doubling up on my finance sector risk here. And with a weak economic outlook, it’s real risk.

NatWest, along with other banks, reported a Q1 profit fall. And Bank of England rate cuts, when they come, could hurt our banks’ lending margins. In today’s global scene, anything in finance and insurance could be in for a shaky year or two.

Still, the only reason I wouldn’t buy Phoenix now is that I own some Aviva shares. And like banks, one insurance firm is enough for me in 2024.

Long-term buys

Of the others, I bought some Persimmon shares, otherwise I’d want to buy into the long-term house building market.

I’m warming to the BT dividend too, despite the firm’s big debts. BT’s latest results make me think it’s turning the corner, and the dividend could be stable now.

So, if I didn’t already have shares in three of the sectors here, these five could easily be my next passive income buys.

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.

HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Alan Oscroft has positions in Aviva Plc, Lloyds Banking Group Plc, and Persimmon Plc. The Motley Fool UK has recommended British American Tobacco P.l.c., HSBC Holdings, and Lloyds Banking Group Plc. 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 black man looking at phone while on the London Overground
Investing Articles

This 10.6% yielder beats every dividend share on the FTSE 100. Can it last?

Harvey Jones couldn't resist the double-digit yield on offer from this FTSE 100 stock. Now he'd like to get some…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

With the FTSE 100 flying, I love the look of this company

The FTSE 100 index has been in rally mode over the last few months, but I think one of it's…

Read more »

Investing Articles

17% of my Stocks and Shares ISA is invested in these 2 UK shares

Stephen Wright looks to focus on investments in companies that have strong competitive advantages. And two UK shares stand out…

Read more »

Investing Articles

Here’s how much income I’d get if I invested my entire £20k ISA into Lloyds shares

Harvey Jones bought Lloyds shares last year and is kicking himself for failing to buy even more of them. The…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

Apple is still my favourite company in the S&P 500, here’s why

Apple recently unveiled a lot of new software at a developer conference. Here's why the tech giant is still my…

Read more »

Investing Articles

5 great value UK companies I’d buy in a Stocks and Shares ISA and aim to hold for decades 

Harvey Jones is getting to work on his Stocks and Shares ISA. He thinks these five firms have solid income…

Read more »

Value Shares

Are GSK shares a bargain after falling 11%?

GSK shares have taken a hit in recent weeks due to Zantac uncertainty. Here, Edward Sheldon looks at whether they’re…

Read more »

Investing Articles

Nearing £5, could the Rolls-Royce share price hit £6?

The Rolls-Royce share price has soared in the past year. Our writer thinks there could be a strong runway ahead…

Read more »