3 FTSE 100 stocks pumping out passive income for over 10 years
If the US is the home of tech giants, then the London Stock Exchange is the promised land of passive income. There are literally hundreds of high-yield dividends stocks listed here, with many having tremendous track records.
Here are three FTSE 100 stocks that have been serving up regular income for a decade or more.
Tobacco
British American Tobacco (LSE:BATS) is the firm behind Dunhill, Lucky Strike, and a portfolio of vaping and oral tobacco products.
Love it or loathe it, this FTSE 100 stock has an incredible long-term dividend track record. The global tobacco giant has increased its annual payout for over 25 years.
Combine that with decent share price growth — 65% in five years — and shareholders have done really well.
Some may be surprised by this. After all, smoking has been steadily declining for 20 years, especially in the West. But while this obviously adds risk, the company has been able to offset this decline with regular cigarette price rises.
Meanwhile, recent studies show that young people who vape are significantly more likely to become smokers later in life. Sadly, I see loads of young vapers around today, and it has become ‘cool’ (like smoking when I was younger). So I don’t expect the firm’s markets to disappear for decades.
Of course, tobacco stocks aren’t for everyone. Many investors rule them out on ethical grounds. But based on current forecasts, the payout is expected to edge up 2.2% next year.
This gives the stock a forward dividend yield of 5.7%, making it potentially worth considering for passive income.
Insurance
Next up is Legal & General (LSE:LGEN). This is the insurance and pensions giant that’s been around since Queen Victoria was on the throne. The 10-year dividend growth rate is roughly 6.2%.
Right now, the stock carries a mighty 8.7% dividend yield (the highest in the FTSE 100). On a forward-looking basis, this rises to 9%!
In other words, someone who invests £10,000 in Legal & General shares could expect £900 back from them every year. This assumes the dividend is met, which isn’t guaranteed. The fragile UK economy could take a turn for the worse, impacting the firm’s earnings.
The share price hasn’t done much over time — it’s flat across 5 and 10 years. But given the enormous yield, I also think it’s worth considering for income.
Troubled spirits giant
Diageo (LSE:DGE) has also been a tremendous dividend payer over the past two decades. However, shares of the Guinness and Tanqueray maker have crashed 54% in the past four years, while dividend growth has come to a shuddering halt.
This reflects challenges like weak consumer spending, less drinking among younger generations, and (possibly) the impact of GLP weight-loss drugs. These are all contributing to the uber-bearish sentiment around the stock.
This makes it less of a reliable dividend payer moving forward, in my opinion. Yet I don’t expect the payout to disappear completely, making the 4.6% dividend yield quite attractive.
On top of this, the stock now looks dirt cheap at just 13.3 times next year’s forecast earnings. Granted, the firm is going through a tricky spell, but that just looks far too cheap to me.
With a new CEO starting in January, I think Diageo has strong turnaround potential over the next five years.
The post 3 FTSE 100 stocks pumping out passive income for over 10 years appeared first on The Motley Fool UK.
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Ben McPoland has positions in Legal & General Group Plc. The Motley Fool UK has recommended British American Tobacco P.l.c. and Diageo 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.
