3 FTSE 100 shares I’d love to buy for powerful passive income!

Some FTSE 100 shares possess attractive returns prospects. Our writer breaks down three picks she reckons are screaming buys!

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Young woman holding up three fingers

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Three FTSE 100 shares I’m planning on buying as soon as I can for juicy dividends are Taylor Wimpey (LSE: TW.), Lloyds Banking Group (LSE: LLOY), and Reckitt (LSE: RKT).

Here’s why I’m bullish on the shares!

What they do

Taylor Wimpey is one of the UK’s largest house builders. It has struggled in recent months due to economic shocks that have hurt house-building numbers. One of the biggest issues it has faced is higher-than-expected inflation.

Lloyds is the UK’s largest mortgage lender. Higher interest rates have been a double-edged sword for the business, providing increased income levels, but the chance of more defaults too.

Reckitt is one of the largest cleaning and healthcare businesses in the world. It possesses excellent brand power, as well as wide coverage.

The bear case broken down

For Taylor Wimpey, continued economic issues are a worry, as they’re impacting the housing market. For example, mortgage rates are higher due to interest rates, making buying much harder for consumers. With less sales, performance and returns are impacted. Plus, higher inflation is making building homes costlier. If this continues for a sustained period, I’m worried returns could be impacted.

For Lloyds, as well as continued volatility, I’m more concerned about a recent issue potentially hurting investment viability. I’m referring to an investigation by the Financial Conduct Authority (FCA) into motor finance practices and mis-selling. The business has already set aside money for potential fines, but this could dent sentiment, as well as returns.

Finally, Reckitt’s biggest issue for me is two fold. Firstly, inflationary issues could hurt margin levels and profits. Next, as many of its products are considered premium, consumers with tighter budgets could turn to non-brand essentials, as well as discount supermarkets for their goods. In turn, this could hurt performance and returns.

My bull case

Starting with Taylor Wimpey again, I reckon returns could keep flowing in due to its excellent market position, as well as the housing imbalance in the UK. With demand outstripping supply, there’s an opportunity for the business to plug this gap, and grow performance and returns.

The shares look decent value for money on a price-to-earnings ratio of 13, and offer a dividend yield of over 7%. However, I’m conscious that dividends are never guaranteed.

Moving on to Lloyds shares, its position as the UK’s leading mortgage provider is enviable. Similar to Taylor Wimpey, it could capitalise on the housing imbalance as people look to secure their dream homes.

Lloyds shares look dirt-cheap to me, on a P/E ratio of just six, and offer a dividend yield of 5.4%.

Finally, despite recent problems, including legal and accounting issues, it’s hard for me to ignore the firm’s brand power, track record, and wide presence. I reckon it’s a great example of a business that will rebound from its current dip, and soar once more, as well as providing consistent returns and growth.

The shares are reasonably priced, trading on a P/E ratio of just 13. Furthermore, the dividend yield on offer of 4.5% is attractive.

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.

Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group Plc and Reckitt Benckiser 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.

More on Investing Articles

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

£9,000 of savings? Here’s my 3-step approach to aim for £1,794 in passive income

Christopher Ruane walks through the practical steps he would take to try and turn £9,000 into a sizeable passive income…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

I’d buy 29,412 shares of this UK dividend stock for £150 a month in passive income

Insiders have been buying this dividend stock, which offers an 8.5% yield. Roland Head explains why he’d choose the shares…

Read more »

Red briefcase with the words Budget HM Treasury embossed in gold
Investing Articles

Could the new UK budget spell growth for these 6 FTSE stocks? I think so!

Mark David Hartley considers six UK stocks that could enjoy growth off the back of new measures announced in the…

Read more »

Investing Articles

With a 6.6% yield, is now the right time to add this income stock to my ISA?

Our writer’s looking to boost his Stocks and Shares ISA. With this in mind, he’s debating whether to buy a…

Read more »

Dividend Shares

This blue-chip FTSE stock just fell 12.5% in a day. Is it time to consider buying?

Smith & Nephew is a well-known, blue-chip FTSE stock with a decent dividend yield. And its share price just dropped…

Read more »

Investing Articles

At 72p, the Vodafone share price looks to be at least 33% undervalued to me

Our writer looks at a number of valuation measures to determine whether the Vodafone share price reflects the fair value…

Read more »

Investing Articles

Why I’ve just sold two of the largest investments in my Stocks and Shares ISA

Stephen Wright has been making room for a new addition to his Stocks and Shares ISA. What is it and…

Read more »

Investing Articles

2 UK shares I’m avoiding like the plague in today’s stock market

Stephen Wright is a big fan of UK shares. But both the FTSE 100 and the FTSE 250 contain companies…

Read more »