Stop saving and start investing! I’d buy these 2 FTSE 100 stocks to make a passive income

I think these two FTSE 100 (INDEXFTSE:UKX) shares offer improving income investing outlooks.

| 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.

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.

With interest rates on cash savings accounts currently being lower than inflation in many cases, buying FTSE 100 dividend shares could be a shrewd move.

The index offers a relatively high yield at the present time, with many of its members set to produce rising dividends over the coming years.

With that in mind, here are two large-cap income shares that could offer a growing passive income and may be worth buying today.

British Land

The most recent results from real estate investment trust (REIT) British Land (LSE: BLND) highlighted the progress it is making in responding to changing occupier demand in the commercial property sector.

For example, the company detailed its further shift away from retail space, as e-commerce continues to contribute to weaker demand for retail units across the UK. In its place, British Land is seeking to increase its exposure to office units. It has enjoyed relatively robust demand for new and existing units, which could help to offset a challenging outlook for the retail segment.

The stock has a long track record of delivering dividend growth alongside a solid yield. At the present time, it offers an income return of around 5.7%. It is expected to increase shareholder payouts by 2.4% per annum over the next two years, which is likely to be ahead of inflation. And since its shares trade on a price-to-book (P/B) ratio of 0.7, it seems to offer a wide margin of safety.

Therefore, while commercial property may not be a popular sector to invest in at the present time, it could offer a mix of high income returns and share price growth potential through companies such as British Land.

Aviva

Another FTSE 100 share that has experienced mixed performance in recent quarters is insurance business Aviva (LSE: AV). The company’s half-year results showed that its general insurance division made encouraging progress, but this was offset to some extent by weak performances in life insurance and asset management.

As a result, the company has made major changes to its operating model. For example, it has separated its life and general insurance businesses, while ramping-up its investment in digital opportunities. This could strengthen its competitive position in those markets and enable it to report a stronger financial performance in the coming quarters.

With a dividend yield of 7.9%, Aviva could offer a highly attractive income return. It increased dividends per share by 3% at its half-year results, and is forecast to raise them by 3.9% in the next financial year. This could mean that investors can obtain an 8%+ yield over the medium term, with the potential for above-inflation rises in shareholder payouts.

Alongside its income potential, Aviva trades on a price-to-earnings (P/E) ratio of just 7. This suggests that it offers a wide margin of safety and may be worth buying today for the long term.

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.

Peter Stephens owns shares of Aviva and British Land Co. The Motley Fool UK has recommended British Land Co. 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

Investing Articles

Could I use a stock market crash to turn £20k into half a mil in just over a decade?

A stock market crash might sound terrifying to some but it can also present a once-in-a-lifetime opportunity to accumulate generational…

Read more »

Investing Articles

Recently released: October’s small-cap stock recommendation [PREMIUM PICKS]

We believe the UK small-cap market offers a myriad of opportunities across a wide range of different businesses and industries.

Read more »

Investing Articles

Here’s how a Stocks and Shares ISA and Lifetime ISA could supercharge my wealth!

Individual Savings Accounts (ISAs) can help UK share investors take their earnings to the next level. And their importance is…

Read more »

A person holding onto a fan of twenty pound notes
Investing Articles

A high-yield dividend ETF and an investment trust to consider this November!

Investors wanting to boost their passive income could benefit from investigating these high-yield funds and trusts, says Royston Wild.

Read more »

Investing Articles

2 of my favourite, cheap FTSE 100 growth shares this November!

These FTSE 100 growth shares could be great long-term picks to consider, reckons Royston Wild. At current prices he thinks…

Read more »

Investing Articles

Up 26%, can the BT share price really push higher still?

The BT share price has surged on several catalysts in 2024, but there’s evidence to suggest that the stock could…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

What are the best dividend shares to buy right now?

As shares in B&M European Value Retail have fallen, the dividend yield has reached a 10-year high. Should investors be…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

My favourite FTSE 100 passive income stock that keeps the Christmas coffers full

The holiday season is expensive and can leave many consumers struggling to make ends meet. Here’s how I use a…

Read more »