3 world-class FTSE 100 dividend shares I’d consider buying for lasting passive income

Dividends can never be guaranteed, but some FTSE 100 firms have been head and shoulders above the pack when it comes to dishing out passive income.

| More on:
Passive income text with pin graph chart on business table

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 want to be as confident as possible that I’ll be paid dividends year after year if I’m going to buy shares for passive income.

Fortunately, there’s no shortage of brilliant FTSE 100 stocks with records of doing just that for their investors.

Here are three I’d be comfortable buying today if funds allowed.

BAE Systems

Wars are mercifully irregular. So, the idea that defence giant BAE Systems (LSE: BA) could be a great income stock — and one that hikes how much cash it returns every year — seems fanciful. However, that’s been the case for… decades!

I struggle to see how this won’t continue. The invasion of Ukraine and conflict in Gaza have been awful. They’ve also allowed the £40bn cap to enter something of a purple patch, both in terms of trading and popularity among investors.

One concern with buying now, however, is the price of 20 times forecast earnings. That’s far higher than BAE’s five-year average valuation (15 times earnings). Would the stock lose height if expectations weren’t met?

It’s always possible. On the other hand, the world will never be free of bad actors. As a world leader at what it does, I reckon this makes for a uniquely stable outlook among UK shares.

As things stand, the dividend yield is 2.4%.


It’s deadly dull when compared to the average US tech titan but Unilever (LSE: ULVR) also has solid income credentials. The relative predictability of earnings (it produces low-ticket items bought out of habit and used by 3.4bn people every day) gives the company a ‘defensive’ feel. It also helps to explain why management is able to increase dividends almost every year.

Of course, no investment is devoid of risk and no income stream is totally secure. As the cost-of-living crisis has shown, shoppers are prepared to switch to cheaper alternatives when funds run low.

With UK inflation now retreating back to the Bank of England’s desired 2%, however, I think those already invested can sleep easy. The 3.4% forecast yield looks likely to be easily covered by expected profit.

This might help to explain why Unilever has trounced the market return in 2024 so far.

The only snag is that I’m now expected to pay the equivalent of 19 times earnings to acquire a stake.


By now, readers have possibly noticed a trend: the most consistent payers tend not to offer bumper yields. At 2.4%, international distributor Bunzl (LSE: BNZL) is no exception. Actually, one might argue that the biggest risk here, aside from a change in management, is the opportunity cost of not earning more income elsewhere.

But buying only the highest-yielding stocks isn’t for me. While there are exceptions, it’s often the case that a yield has shot up because the share price has tumbled.

BY contrast, this is another firm that does something exceedingly dull — delivering items such as cleaning products and food packaging in 33 countries — exceedingly well. Again this has supported annual dividend increases for decades.

I can’t see demand falling off a cliff. Actually, all sorts of businesses and organisations would surely grind to a halt if the supplier ceased to exist.

So, Bunzl would undoubtedly be on my wishlist if I were looking for lasting passive income.

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.

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended BAE Systems, Bunzl Plc, and Unilever 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

Investing For Beginners

How to try and build a £250k Stocks and Shares ISA from scratch, starting in 2024

With a regular savings plan and a smart investment strategy, it’s possible to build wealth within a Stocks and Shares…

Read more »

Investing Articles

I’m considering 3 top UK dividend stocks for my portfolio this July

Mark David Hartley is looking at adding a few dividend stocks to his portfolio this month. Will these three shares…

Read more »

Investing Articles

3 FTSE 100 shares I’d buy to create lasting passive income

Dividend stocks are a great way to build an additional income. Our writer details three FTSE 100 picks she’d love…

Read more »

Investing Articles

After falling 9% in 6 weeks, is this FTSE 100 stock now in bargain territory?

The BAE Systems share price hit a 52-week high on 3 June. Six weeks later, it’s down nearly 10%. Is…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

I love the look of Entain shares, potentially 47% undervalued

Many FTSE 100 companies have been on a tear in 2024, but with Entain shares down nearly 50%, I think…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

Could Aviva shares reach £5.84 in the next 12 months?

Some analysts think Aviva shares could soar nearly 19% in the next year. This Fool takes a closer look to…

Read more »

Investing Articles

I’m looking at a once-in-a-decade chance to buy dirt-cheap FTSE dividend shares

Harvey Jones says FTSE 100 dividend shares have been showing signs of life lately but they're still cheap and there's…

Read more »

Arrow symbol glowing amid black arrow symbols on black background.
Investing Articles

If I’d put £10k in BAE Systems shares 10 years ago, here’s what I’d have now

BAE Systems shares have been on fire over the last decade. But just how much would a £10k investment back…

Read more »