Image Alt

The Investing Box

  /  Editor's Pick   /  Forget Shiba Inu! I’d buy FTSE 100 shares paying high-yield passive income

Forget Shiba Inu! I’d buy FTSE 100 shares paying high-yield passive income

Young Woman Drives Car With Dog in Back Seat

Apparently the recent launch of the Shibarium layer 2 blockchain network built by the Shiba Inu community didn’t go smoothly. This caused the meme coin price to drop sharply, further adding to my skepticism of crypto. Here’s why I’d rather invest in high-quality UK companies for high-yield passive income.

No little Bitcoins

My main problem with crypto is that any investment I make will never pay me back any income. That is, I’m not going to receive any dogecoin dividends I can use to go buy bread and milk in my local Tesco.

That’s because crypto doesn’t produce anything tangible, as investing legend Warren Buffett has repeatedly pointed out.

Bitcoin has no unique value at all, it doesn’t produce anything. You can stare at it all day and no little bitcoins come out…It’s a delusion basically.

Warren Buffett

What isn’t a delusion is that many FTSE 100 stocks are offering sky-high dividend yields right now.

Vodafone Telecommunications 10.8%
M&G Investment company 10.4%
Phoenix Group Insurance 10.0%
British American Tobacco Tobacco 9.2%
Legal & General Insurance 8.9%
Abrdn Investment company 8.8%
Taylor Wimpey Housebuilder 8.4%
Aviva Insurance 8.3%

I can invest in these companies today and expect to share in their profits. What’s more, I also get a semi-regular update from management so I can check everything is ticking along nicely (or not).

The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry several risks, including the total loss of any monies invested. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Get rich slowly

To my mind, the main appeal of crypto is the allure of getting rich quickly. The only other thing in life that I think matches it is the idea of a winning lottery ticket. And the chances of getting rich from either look about the same to me.

What isn’t in doubt, however, is that many people have gotten rich slowly through investing in the stock market. If I put £400 a week into shares that return an average of 10% per year, I’d have £1.1m after 19 years.

That’s assuming I leave it untouched and reinvest the dividends. Such is the power of compound interest.

Indeed, it’s so powerful that if I invested this way for 50 years, generating my average 10% return, I’d end up with over £25m. After 89 years of £400 a week, the portfolio would top £1bn.

But would I have a million-pound portfolio after 19 years of putting my hard-earned savings into crypto? I have no idea, so I’d rather try the stock market route, thank you very much.

A few final caveats

Now, as exciting as that may sound, I should point a couple of things out. The first is that a 10% annual long-term return isn’t guaranteed.

True, it is broadly the average annualised return of the S&P 500 (with dividends reinvested) over the last few decades. But that historical average may trend downwards.

Secondly, dividends aren’t guaranteed to be paid throughout the year. Events like banks collapsing and pandemics do happen, disrupting the cash flows out of which companies pay dividends.

Today, however, many of the FTSE 100 companies paying high-yield dividends are not in distress. It’s just that investor sentiment is low around Footsie stocks and the UK economy right now.

But history suggests that it can pay to invest when others are cautious and fearful. In fact, it’s times like these when I prefer to do my shopping.

The post Forget Shiba Inu! I’d buy FTSE 100 shares paying high-yield passive income appeared first on The Motley Fool UK.

However, don’t buy any shares just yet

Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.

It’s called ‘5 Stocks for Trying to Build Wealth After 50’.

And it’s yours, free.

Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.

And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.

That’s why now could be an ideal time to secure this valuable investment research.

Mark’s ‘Foolish’ analysts have scoured the markets low and high.

This special report reveals 5 of his favourite long-term ‘Buys’.

Please, don’t make any big decisions before seeing them.

Secure your FREE copy

setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#ffffff”, ‘color’, ‘#FFFFFF’);

More reading

  • 5.5% yields! Here’s the dividend forecast for Admiral shares for 2023 and 2024
  • Down 70% to 62p! Is this unloved penny stock set for a massive rebound?
  • “The next new £1bn UK stock will be…”
  • Is now the right time to invest a Stocks and Shares ISA?
  • Zero savings? I’d use these 3 key Warren Buffett techniques to build wealth

Ben McPoland has positions in Legal & General Group Plc. The Motley Fool UK has recommended British American Tobacco P.l.c., Imperial Brands Plc, M&g Plc, Tesco 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.