The Motley Fool

3 FTSE 100 shares I’d buy to achieve financial freedom

Image source: Getty Images

2020 reminded us that it’s always a good idea to have a second income stream. This can ensure that we are relatively cushioned if inflows from one stream either subside or stop entirely. It can even help us achieve financial freedom. Here are three FTSE 100 stocks I’d buy to achieve this goal.

#1. Severn Trent: generating steady passive income

Building up a stream of passive income is the most direct way of ensuring regular inflows without as much as lifting a finger. The good news is that many FTSE 100 shares have started paying dividends again. And there are others that will re-start them soon enough. 

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...

In other words, investors have plenty of choice when it comes to buying dividend stocks. 

While it’s a good idea to diversify even among income stocks — especially considering that we are just coming out of a time when many FTSE 100 companies cancelled dividends — there’s one stock I’d like to buy in particular. 

That is water and sewerage services provider Severn Trent, which has a dividend yield of 4.2%. As a utility, I like that it has predictable demand. Its financial performance is also robust. Both put together encourage me to believe that its dividends are more reliable than those of many other FTSE 100 stocks. 

You might  be put off by its high earnings ratio of almost 50 times. I would argue that it is a reasonable premium for a safe growth and income stock. I doubt that its share price will decline sustainably from here. 

#2. JD Sports Fashion: the FTSE 100 king of performance

Besides earning a passive income, another way of gaining financial freedom is by investing in high-growth stocks.

One growth stock I’ve long liked is JD Sports Fashion. There are others too, but I want to make a special mention of JD today because it’s the biggest FTSE 100 gainer today after its robust update. 

Even though 2020 has been a tough year for retailers, JD, with the catchphrase “Undisputed king of trainers”, expects healthy profits, buoyed by online demand and the growing popularity of athleisure products. 

#3. IAG: dirt cheap, high potential

Finally, there’s also another kind of growth stock to consider — the kind that has suffered in the pandemic. Its prospects may not look as definite as those of JD, but I think its current prices are so low that there’s great potential for gains over time. 

A god FTSE 100 example is the aviation company International Consolidated Airlines Group (IAG). Its share price has already nearly doubled once in 2020, between September and November, as the vaccine news came in. 

With the UK in lockdown again, there’s undoubtedly more pain in store for the owner of British Airways. However, I am a believer in the potential for a huge bounce back in aviation over the next couple of years. I reckon the likes of IAG and easyJet could look like savvy investments in hindsight. 

There’s a ‘double agent’ hiding in the FTSE… we recommend you buy it!

Don’t miss our special stock presentation.

It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about.

They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market.

That’s why they’re referring to it as the FTSE’s ‘double agent’.

Because they believe it’s working both with the market… And against it.

To find out why we think you should add it to your portfolio today…

Click here to get access to our presentation, and learn how to get the name of this 'double agent'!

Manika Premsingh owns shares of easyJet and JD Sports Fashion. 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.