An uncertain economic outlook has not only prompted a stock market crash in 2020. It has also led to dividend cuts across a number of UK shares. As such, it is more difficult to make a growing passive income now than it was a year ago, or even at the start of the calendar year.
Despite this, a number of FTSE 100 shares continue to offer attractive dividends that can grow over the long run. Here are two such companies that could offer improving passive income prospects when purchased in a tax-efficient account such as an ISA.
Resilient performance in the stock market crash
The company’s defensive business model is evidenced by its recent updates. For example, in the first half of the year it posted a 14% rise in sales and a 26% increase in core earnings per share. This shows that it may be less impacted by a global economic slowdown or a stock market crash than other UK shares. Therefore, it may offer a more resilient passive income investing opportunity.
Looking ahead, AstraZeneca is forecast to post a 27% rise in its net profit next year. This could mean that it is able to raise dividends per share so that its yield of 2.7% becomes more appealing.
The company’s valuation also suggests that it offers capital growth potential. Certainly, it has a relatively high price-to-earnings (P/E) ratio of 25. However, its high earnings growth rate and resilient prospects ahead of a potential second stock market crash indicate that it could produce impressive total returns over the long run.
Passive income growth opportunity
Segro (LSE: SGRO) is another FTSE 100 share that has outperformed many of its index peers since the stock market crash. In fact, its share price has risen by 2% since the start of the year.
A key reason for this is that demand for the company’s warehouses is likely to increase over the long run. This is due to the rising popularity of online shopping, which could be catalysed by recent lockdown measures.
The company’s dividend yield of 2.4% is lower than many other UK shares at the present time. However, over the long run, the company’s shareholder payouts could rise at a relatively fast pace. This may increase the appeal of Segro’s shares in a low interest rate environment where inflationary pressures may build in response to a loose monetary policy.
As such, the company could offer long-term total return prospects. Its shares may not have fallen after the stock market crash, but they appear to offer a mix of passive income appeal and capital appreciation potential over the coming years.
Peter Stephens owns shares of AstraZeneca. 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.