£9k in an ISA? Here are 2 FTSE 100 stocks to consider for a juicy second income

There are plenty of quality UK shares to consider when attempting to build a second income. Here are two high-yielders from the blue-chip index.

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The Stocks and Shares ISA contribution limit is £20k a year. That’s easily enough to build wealth over time, whether through growth stocks, index funds, or dividend shares that pay a tax-free second income.

Here are a pair of FTSE 100 income stocks that an investor with £9k might want to consider for 2025.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

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Global banking giant

First up is HSBC (LSE: HSBA). The banking goliath is riding high, with the share price at its highest point since the start of 2018.

At 750p, it’s up about 21% in the past year, which tops Lloyds (16%) but falls well behind Barclays and NatWest (both up around 88%).

Created with Highcharts 11.4.3HSBC Holdings PriceZoom1M3M6MYTD1Y5Y10YALL9 Dec 20199 Dec 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

Despite this, HSBC’s forward dividend yield for 2025 is still a very attractive 6.8%. That’s nearly double the index average.

A key attraction here for me (and why I own the stock) is that the bank straddles both Western and Asian markets in the East. The latter offers potentially higher growth prospects over the long run.

Admittedly, things could get a bit rocky with Donald Trump’s proposed tariffs and the potential for trade wars. Economic downturns and geopolitical tensions in key markets could adversely impact the bank’s profitability.

Still, Asia remains the fastest-growing region globally. The number of ultra-high-net-worth individuals there is set to grow by 38% between 2023 and 2028, according to Knight Frank.

HSBC is going after this wealth market, while continuing to buy back a load of its own shares while they’re cheap.

UK insurance giant

Another dividend stock I reckon is worthy of consideration is Aviva (LSE: AV.) Shares of the insurance firm are up 13% over the past year, yet remain cheap at less than 10 times forecast earnings for 2025.

Created with Highcharts 11.4.3Aviva Plc PriceZoom1M3M6MYTD1Y5Y10YALL9 Dec 20199 Dec 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

This translates into a market-thumping 7.8% forward yield. I find that very attractive for an established blue-chip that’s grown its customer base by 1.2m to 19.6m over the past four years.

Speaking of four years ago, Aviva did cut its dividend back then. And the payout is less today than it was in 2018 (39.5p per share), signalling that the firm is no Dividend Aristocrat.

Nevertheless, Aviva has since streamlined its operations to focus on core markets in the UK, Ireland, and Canada. And it’s been progressively increasing the dividend, with the trajectory looking promising.

Year20202021202220232024 (Forecast)2025 (Forecast)
Dividend per share 27.6p29p31p33.4p35.3p38p

In recent days, the company agreed a deal to snap up Direct Line (owner of Churchill and Green Flag) for £3.6bn. If approved, this acquisition would give Aviva more than 20% of the UK car insurance market, as well as a fair bit of the home sector too.

Mind you, this could pose significant integration challenges, with the anticipated synergies possibly failing to materialise as planned. There might be some potholes along the way.

On balance though, I reckon a cheap valuation, good business momentum, and a high yield make Aviva stock worth a look.

Second income potential

Dividends aren’t guaranteed, no matter how established a company is. If met though, the passive income opportunity here appears very attractive.

Nine grand invested evenly between the two stocks gives an average dividend yield of 7.3%. This would offer an investor the chance to bag around £657 in annual passive income.

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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.

Ben McPoland has positions in Aviva Plc and HSBC Holdings. The Motley Fool UK has recommended Barclays Plc, 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.

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