A FTSE 100 stock I’d buy for passive income

When it comes to passive income investments, I favour stocks in the FTSE 100. I concentrate on blue-chip companies as I believe they are more predictable and financially secure than their smaller peers. These are essential qualities for income investments. 

I also like to focus on property companies. Many investors choose this sector when they are looking for passive income. However, due to the high cost of properties in the UK, not all investors can take this approach. 

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story. In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

This is where real estate investment trusts (REITs) can come in handy. These companies own portfolios of properties, which they manage on behalf of investors and distribute rental income via dividends. As such, I think they are a great passive income option for investors who cannot afford to buy a property portfolio themselves. 

FTSE 100 passive income 

One of the largest REITs on the London market is Landsec (LSE: LAND). This group owns a portfolio of commercial properties across the UK. A large percentage of the portfolio is concentrated in London, where the organisation owns landmark assets such as the Piccadilly Circus lights. 

Unfortunately, even the company’s high-quality property portfolio has not been able to save it for the turbulence of the past two years. The coronavirus pandemic has caused a significant amount of pain for landlords and tenants alike. Commercial property values have collapsed in some regions. 

The market is beginning to rebound, especially in highly sought after locations. According to its latest rent collection update, Landsec collected 89% of rents outstanding for the quarter ended 29 September, up from 81% for the June quarter

Companies have to distribute 90% of their rental income to investors as dividends to qualify as a REIT. As such, investors are set to benefit from Landsec’s higher rent collection levels through higher dividends. 

City analysts reckon the firm’s dividend will rise to 33p for the 2022 fiscal year, up 51% from 2021’s figure. That would leave the stock yielding 4.8%. 

Value acquisition 

Of course, there is no guarantee the group will hit this projection. Further coronavirus restrictions could cause rent collection volumes to decline again. Higher interest rates will also increase the cost of the company’s debt, reducing the amount of money it can return to investors. 

And thanks to the e-commerce revolution, the outlook for commercial property values is incredibly uncertain. 

Still, Landsec is making concerted efforts to diversify its portfolio. As well as increasing investment in office properties, and flexible working spaces, today, the organisation has announced the acquisition of urban regeneration specialist U+I group.

U+I provides access to a significant pipeline of mixed-use development schemes across the country, further diversifying Landsec’s portfolio. What’s more, the group is paying 149p per share in cash for the business. Its last-reported net asset value was 163p. These figures imply the more prominent developer has achieved quite a good deal. 

Therefore, considering Landsec’s diversification, income potential and high-quality property holdings, I would buy the FTSE 100 stock as a passive income investment for my portfolio. 

Our 5 Top Shares for the New “Green Industrial Revolution”

It was released in November 2020, and make no mistake:

It’s happening.

The UK Government’s 10-point plan for a new “Green Industrial Revolution.”

PriceWaterhouse Coopers believes this trend will cost £400billion…

…That’s just here in Britain over the next 10 years.

Worldwide, the Green Industrial Revolution could be worth TRILLIONS.

It’s why I’m urging all investors to read this special presentation carefully, and learn how you can uncover the 5 companies that we believe are poised to profit from this gargantuan trend ahead!

Access this special “Green Industrial Revolution” presentation now

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Landsec. 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.

Comments are closed.