£15,000 in savings? 3 FTSE shares I’d buy to create lasting passive income

Muhammad Cheema takes a look at three passive income shares, with dividend yields above 5% that he believes investors should take notice of.

| More on:
Young Caucasian girl showing and pointing up with fingers number three against yellow background

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’m always hunting for passive income opportunities. Looking at the UK stock market, I’ve identified three FTSE 100 shares I’d buy to create a nice second income if I had a spare £15,000 to do so.

National Grid

National Grid (LSE:NG) shares recently fell after underwhelming earnings and a dividend rebasement.

Gross revenue declined by 10% while operating profit also fell by 11%. A particular concern for me is also the £44.8bn of debt on its balance sheet.

However, the company is still the key electricity distributor for the UK and I expect demand for electricity to continue rising over time.

Furthermore, management is planning to invest £60bn between now and 2029 to address the debt problem. It will be used on projects, such as the decarbonisation of its energy infrastructure. This should improve supply and lower bills for consumers through efficiency, ultimately bolstering its long-term economic growth.

Moreover, the dividend rebasement (arising from its £7bn rights issue) isn’t as perilous as it first seems. The dividend yield is expected to dip to 5.3% in 2025 but is expected to grow from there.

This is still far superior to the average FTSE 100 yield of 3.6%, making it a great share to generate a stable second income.


Aviva (LSE:AV) shares have had a strong 2024 so far, climbing by 11%. This has outperformed the Footsie that has only increased by 6%.

And there’s a reason why. In its latest accounts, gross written premiums have risen by 13% year on year and operating profit rose by 9%.

The company currently boasts a dividend yield of 7%. My (hypothetical) £15,000 invested in it would therefore make roughly £1,050 in annual income. Not bad at all! With a strong track record of it raising dividends, this is likely to rise over time too.

There are risks with Aviva. It’s a naturally cyclical business due to its involvement in the financial services sector. Therefore, in economically fragile times, some people might not be able to afford to take out insurance policies.

However, the opposite is true when the economy performs well and that seems to be turning a corner in the UK. With inflation also falling, now might be a good time for me to grab some of its shares.

To finish off, I’ve chosen another financial services firm. But Legal & General (LSE:LGEN) shares have seen different fortunes, falling by over 8% in 2024.

The company recently announced a restructuring with new financial targets, including international growth, particularly in the US. It believes this could increase operating earnings per share by 6%-9% annually between 2024 and 2027.

This announcement didn’t fly well with investors though, as the firm cut the expected annual dividend growth rate to 5% in 2024 and only 2% between 2025 to 2027.

However, this doesn’t concern me so much as the company already possesses a monster dividend yield of 9%. My £15,000 invested in this stock would therefore make me roughly £1,350 annually.

My one concern is that there’s always a risk that expanding abroad may not be executed well. But sometimes to fuel growth a company has to take risks, so this could also be an opportunity that is good for its earnings.

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.

Muhammad Cheema 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

Investing Articles

I reckon these 2 penny shares are hidden gems worth a closer look!

Some penny shares are well-known, whereas many others go under the radar, but that doesn’t necessarily mean they aren’t potentially…

Read more »

Investing Articles

Just released: our 3 best dividend-focused stocks to buy before August [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Investing Articles

2 FTSE 100 shares with blockbuster yields investors should consider buying

Our writer has noticed that these FTSE 100 shares offer mammoth dividend yields, and reckons investors should take a closer…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Down 36% and yielding 7.8%, is this FTSE 250 share a bargain?

Christopher Ruane looks at a FTSE 250 share with a sizeable dividend yield and a recent record of dividend growth.…

Read more »

Investing Articles

Is Barclays one of the FTSE 100’s best bargain stocks?

Right now, Barclays' shares are cheaper than those of FTSE 100 rival stocks Lloyds and NatWest. So should I buy…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

Is a takeover offer about to boost the Rentokil stock price, and should I buy?

The Rentokil share price is up 10% on takeover rumours. Is it a stock to buy or one to be…

Read more »

Investing Articles

Here’s my Rolls-Royce dividend forecast for 2024-27!

Our writer considers whether the Rolls-Royce dividend might be reinstated in coming years, based on financial performance and stated payout…

Read more »

Investing Articles

What would I do if Rolls-Royce shares plunged 50%? History suggests a big decline is coming

While Rolls-Royce shares have delivered massive outperformance in recent years, they also have a history of significant declines.

Read more »