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.
The post 3 FTSE 100 shares I’d love to buy for powerful passive income! appeared first on The Motley Fool UK.
Should you invest £1,000 in Lloyds Banking Group Plc right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group Plc made the list?
See the 6 stocks
More reading
If I’d bought Taylor Wimpey shares three months ago, here’s what I’d have now
7%+ dividend yields! 4 FTSE 100 shares for investors to consider buying in April
2 failing UK stocks I’ll consider selling soon if things don’t turn around
2 FTSE 100 and FTSE 250 stocks to consider buying for the new ISA year!
Should I buy the 2 worst FTSE 100 stocks after they fell 17% in a month?
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.
