I’m looking for more income shares to add to my Stocks and Shares ISA in 2024. And the FTSE 100 is helpfully staying low, leaving plenty of big dividends for me to choose from.
My aim is to put some money away each month, and buy shares every time I have enough. And I want to build a big enough pot to pay me a bit of passive income to help me when I retire.
Other people have other ways of trying to create some extra income. But I want something that doesn’t mean much work for me. And the UK stock market has beaten other forms of investment for more than a century now.
Biggest yields?
I won’t just snap up the biggest dividends yields on offer, because they’re not guaranteed. And they often drop, or can be cut altogether.
It means I need to be convinced that a dividend stock can keep on paying before I’ll buy it.
That rules out something like Vodafone, despite a massive 11.7% yield on the cards right now. Its earnings don’t cover it, and it looks like the market has little confidence — the share price is down 55% in five years.
If the dividend keeps up, I could be badly wrong. But I want a bit more safety.
Long-term thinking
Talking of safety, I mean in the long term, over 10, 20 years or more. It means I don’t mind buying something with a bit of short-term volatility.
That’s why Aviva with a 7.4% yield, and Legal & General at 7.8%, are two of my top income stock candidates this year.
They could come under pressure if earnings are squeezed, and it looks like they might be. And that could dent the share prices. But I see long-term cash cows here.
Banks too
I’m still big on banks for 2024, with big profit rises forecast for the financial sector.
I might add some NatWest Group shares to my Lloyds Banking Group holding. A falling share price has helped push the NatWest forward yield up to 7.3%.
The government’s holding could be a drag, as it will presumably want to sell it some day. And I don’t think the market has forgiven the bank for the Nigel Farage thing. But I’d like some of that dividend.
Sticking again
The other thing I’ll stick with in 2024 is the housebuilding business. Share prices have come back, and with earnings expected to be down this year, dividend yields aren’t as big as they’ve been.
But the 6.6% forecast at Taylor Wimpey is the one I might go for. I really don’t mind a possible couple of years of weak prices, as I still expect long-term dividend growth.
No big change
So, I’m still a fan of the finance sector, and the builders. And that’s no real change in my income stock outlook for 2024.
But I think it makes sense. If we have sectors we’ve researched, understand and like, why chop and change each year? Especially when they’re still cheap.
The post Looking for passive income from the FTSE 100? These are my top 2024 picks appeared first on The Motley Fool UK.
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More reading
At 52-week lows, I think these UK shares are screaming ‘value’
£10K in savings? I’d aim for £383K in shares and £20K a year of passive income
Could Lloyds be the FTSE 100’s best growth stock in 2024?
An exceptional value stock to buy before it’s too late?
How I’d invest £1,000 in FTSE 100 Stocks for 2024
Alan Oscroft has positions in Aviva Plc and Lloyds Banking Group Plc. The Motley Fool UK has recommended Lloyds Banking Group Plc and Vodafone Group Public. 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.
