My investment strategy is simple. I want to buy well-known blue-chip shares with meaty dividend yields that can generate a second income.
2023 hasn’t been kind to us retail investors. But as we head towards the New Year, I’m quietly confident. Granted, I don’t think we’ll see a full stock market recovery. But hopefully, we should get a little bit closer.
I think these two shares could gain some momentum in 2024.
Schroders
As I put more money into my nest egg, I’m always careful to diversify my portfolio to offset risk. That said, I see plenty of value in financial and banking stocks and have been sniffing around them lately.
Schroders (LSE: SDR) is one that’s piqued my interest, especially after nearly a 7% rise in the last month. Despite that, it’s still down 12% in the last year. That does leave it valued at 13.8 times earnings, which in my opinion, is reasonably priced.
The reason I like Schroders as a play for 2024 (and beyond for that matter) is because when investor sentiment begins to pick up again and we enter bull market territory, it’ll be in a strong position to capitalise.
Assets under management (AUM) dropped to £724.3bn in the last quarter as investors continued to tighten their belts and pull their money. However, with it now widely accepted that interest rates have peaked, and with inflation steadily falling back to a more comfortable level, I’d imagine Schroders will begin to see its AUM rise again. A big risk is that this doesn’t happen, of course.
The stock currently yields 5.5%, beating the FTSE 100 average of 4% as well as any amount I’d receive from leaving my cash in most savings accounts. And should the share price stagnate for the foreseeable future, this passive income will tide me over.
HSBC
Another one of my top ideas for a second income is HSBC (LSE: HSBA). The stock has gained momentum in the last year, rising by over 20%. And this year alone it’s climbed 14%. I’m expecting this to continue into 2024.
As I write, it has a 5.6% yield. What’s more, the bank has been keen to return money to shareholders, as seen by its latest buyback scheme of up to $3bn. In 2023, its share buybacks have totalled $7bn. With a price-to-earnings ratio just north of five, it also looks cheap.
What I like about HSBC is its global exposure. It operates in over 60 countries, with a large chunk of its profits coming from Asia, more specifically China.
That said, its large Chinese focus has hampered the bank in times gone by. Ongoing geopolitical tension with the West has been a source of concern. And more recently China’s weak property market, which the firm has $13.6bn invested in, is an issue that mustn’t be ignored.
However, I think China is a high-growth market that in the years ahead will provide ample opportunities for HSBC.
My move
I like the look of Schroders and HSBC. And I’m keen to snap them up before the turn of the year. With any spare cash I have in the weeks ahead, I’ll be buying both.
