2 FTSE 100 stocks to consider for a second (or third) income!

Earning a second income through dividend shares is a great way of dealing with the ever-increasing cost of living or helping to save for old age. With this in mind, here are a couple of blue-chip income stocks that are worthy of further research.

A rainy day

Legal & General (LSE:LGEN), the pensions, asset management and insurance group, should benefit from an ageing population. And cash-strapped governments tempted to increase the state retirement age.

This should help provide the growth in earnings required to meet the company’s pledge to increase its dividend by 2% a year from 2025-2027. Its payout was last cut during the 2008-2009 financial crisis.

Encouragingly, its balance sheet remains robust. It has more than twice the level of reserves necessary to meet its regulatory requirements.

However, its profit could come under pressure from economic uncertainty, particularly in the UK. To meet its obligations, the company relies on investment income from its huge portfolio of equities, bonds and commercial property. Any global wobble or sign of fragility in the domestic economy could result in a cut in its dividend.

Also, wealth management has become an increasingly competitive business. This might lead to a squeeze in margins.

However, since its formation in 1836, the group’s successfully navigated its way through many difficult periods. And it’s seen off plenty of challengers. It now has over £1.1trn of assets under management.

Analysts are forecasting the group to grow its earnings per share by 29% over the next three years. Some of this is expected to come from an enormous pipeline of new pension schemes that it’s looking to acquire.

Impressively, as I write (4 July) it’s the highest-yielding (8.5%) share on the FTSE 100.

Keeping the lights on

As well as operating the UK electricity transmission and distribution networks, National Grid (LSE:NG.) supplies energy to New York and New England.

Over the next four years, the group plans to grow its earnings per share by 6%-8% annually, from a baseline of 73.3p reported for the year ended 31 March 2025 (FY25).

It claims this should give it the headroom to increase its dividend in line with inflation. Although it might not offer the highest yield (4.5%) on the FTSE 100, it’s certainly one of the most reliable dividend payers around. Thanks to its regulated markets, it has a high degree of visibility over its earnings and therefore, how much cash it has available for its payout.

But with all of its earnings coming from just two countries, it has nowhere to turn should the UK or US economies struggle.

And energy infrastructure assets are expensive. It surprised investors in May 2024 with a £7bn rights issue. The money’s needed to help fund a five-year £60bn investment programme. But all appears to be forgiven. Those buying shares at 645p, have since been handsomely rewarded.

This week, there’s been some speculation that the group might have to compensate Heathrow Airport for the March power outage. But any penalty — up to £100m has been quoted — would be inconsequential. At the end of FY25, it had assets of £106.7bn on its balance sheet, including £1.18bn of cash.

Although being regulated has its downsides, I’m sure most companies would relish the prospect of having a monopoly in their key markets.

The post 2 FTSE 100 stocks to consider for a second (or third) income! appeared first on The Motley Fool UK.

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James Beard has positions in Legal & General Group Plc. The Motley Fool UK has recommended National Grid 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.