The Motley Fool

These 2 FTSE 100 stocks are all I need for perpetual passive income

I believe a long-term, income-oriented portfolio should deliver two essentials – stability and high yield. In other words, the business must be robust enough to withstand any political or macroeconomic tensions while sustaining its high payout to loyal shareholders.

As you can imagine, these stocks are exceedingly rare. Much of the FTSE 100 is heavily reliant on external trade, which isn’t a good thing when the world’s two biggest economies are engaged in a trade war. Meanwhile, seemingly never-ending negotiations with the European Union have already eroded the value of some of Britain’s most reliable stocks.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

With that in mind, here are the results of my hunt for stable income stocks that are relatively immune to the business cycle or trade at attractive valuations that offer a margin of safety:

The eternal consumption story

Consumer goods giant Unilever (LSE: ULVR) is an obvious candidate for stable, perpetual returns. With major brands on every continent, the conglomerate is probably one of the most recognisable companies on the planet. This diversification works in the company’s favour when growth slows in certain parts of the world.

In its most recent report, the company claimed weak market growth in Europe and North America was more than offset by growth in emerging markets, which clocked in at 6.2%. Overall, sales were up 3.5% in the second quarter. The stock price is up 25% this year, beating the FTSE 100.

While Unilever’s 3% dividend yield isn’t something to brag about, it’s one of the few companies expected to grow over the next few years even as completes its messy divorce with the European Union. Analysts expect 8% growth in earnings this year and 10% next year, which is a testament to Unilever’s resilience.   

Everyone needs a roof

Although home builder Persimmon (LSE: PSN) isn’t as insulated from economic headwinds as Unilever, I would argue that the company’s business model and sector are eternal. The world faces a chronic shortage of housing as the population explodes, and this issue will need to be resolved regardless of short-term economic and political headwinds.

That means demand for Persimmon’s services is perpetual. The government’s Help to Buy schemes have been key catalysts for the company. Although these schemes are scheduled to end in 2023, I believe there is enough political will to replace them with other incentives by that time.

Persimmon has managed to lower its debt burden and increase its exposure to first-time homebuyers (the prime beneficiaries of government housing schemes) in recent years. Meanwhile, the stock trades at an attractive valuation (7.4 times forward earnings) and offers a stunning dividend yield (12%).

Bottom line

Achieving perpetual passive income isn’t just about high dividend yields. I believe the company’s underlying fundamentals and the industry’s long-term outlook matter just as much, if not more. That’s why my bet is on the eternal demand for housing and ice cream through the two stocks I’ve mentioned here.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

VisheshR has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. 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.