2 FTSE 100 stocks to consider for a second (or third) income!
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.
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.
More reading
5 Stocks For Trying To Build Wealth After 50
One Top Growth Stock from the Motley Fool
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.
Motley Fool UK 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
37 minutes ago
- Yahoo
Liverpool Push Defender for Contract Decision Amid Real Madrid Interest
Liverpool Push for Ibrahima Konate Decision as Real Madrid Monitor Situation Liverpool face a defining few weeks in their negotiations with Ibrahima Konate, with his long-term future hanging in the balance. The French defender, 26, is entering the final year of his contract, and while the club are keen to tie him down, Real Madrid are watching developments closely. As reported by DaveOCKOP, the situation has reached a critical stage. 'And with Real Madrid circling, can exclusively reveal that Liverpool is trying to extend his deal before the summer transfer window closes. The Reds want Konate to make his mind up before the transfer window closes.' Liverpool know that clarity is essential. Having seen the drawn-out sagas involving Mohamed Salah and Trent Alexander-Arnold, the hierarchy do not want another marquee name running down his contract while uncertainty dominates. Photo: IMAGO Wage Demands at the Centre of Negotiations Konate currently earns around £70,000 per week from the contract he signed in 2021. His representatives are pushing for a significant increase, with reports suggesting he wants closer to £200,000 per week. Central to his camp's stance is the structure of the deal, with a preference for guaranteed wages rather than heavily performance-based incentives. Liverpool, naturally cautious about overextending their wage bill, are negotiating carefully. Yet Konate's performances last season under Arne Slot strengthen his case. Featuring in 92.5% of all available minutes, he showcased the consistency and durability that had previously been questioned due to fitness concerns. Madrid Interest and Possible Sale The looming threat comes from Real Madrid, who have made no secret of their admiration for the Frenchman. Liverpool are fully aware that if no agreement is reached in the coming weeks, they may need to sanction a sale. Reports suggest a figure in excess of £35m could be enough to tempt the club into doing business, rather than risk losing him for nothing when his contract expires next summer. For a player entering his prime, the possibility of moving to the Bernabéu may prove persuasive. Photo IMAGO Contingency Plans in Place Liverpool's pursuit of defensive reinforcements adds further intrigue. Marc Guehi has have both been linked with moves to Anfield, a potential signing that could serve as cover should Konate depart. It is a delicate balancing act for Arne Slot and the recruitment team: strengthen the squad, but not at the expense of losing one of their most reliable performers. Time Running Out With the September 1st deadline looming, Liverpool must find resolution. Konate's ability to anchor the defence, combined with his leadership and athleticism, makes him central to Slot's project. But if his demands are not met, the club face a stark choice: agree to terms, or cash in while they still can. The next few weeks will be telling. Liverpool's defence was the cornerstone of their title-winning campaign last season, and losing Konate now would not only disrupt continuity but also embolden rivals. For the club, certainty is everything. Photo: IMAGO Our View – Anfield Index Analysis For Liverpool fans, this situation will feel both familiar and frustrating. Too often in recent years the club has allowed contract sagas to dominate the narrative, from Salah's long-running negotiations to Alexander-Arnold's eventual renewal. Supporters will be keen to see lessons learned, ensuring Konate's case is handled swiftly. There is recognition among fans that Konate has earned his leverage. Last season he was outstanding, putting concerns over fitness behind him and becoming a key figure in Slot's defence. His partnership with Virgil van Dijk gave Liverpool both solidity and reassurance, and losing him would undoubtedly weaken the squad at a crucial time. At the same time, some supporters will feel wary of the wage demands. While Konate deserves a pay rise, the figure of £200,000 per week may feel excessive for a player who still has to prove long-term durability. Fans know the club must strike a balance between rewarding key players and protecting financial stability. The prospect of Real Madrid lurking in the background is unsettling. Liverpool have built their reputation on resilience in the market, but losing Konate to Madrid would sting. For many supporters, the solution is clear: resolve the contract quickly, reward his importance, and focus on strengthening the squad rather than risking another destabilising saga.
Yahoo
40 minutes ago
- Yahoo
BrewDog beers axed by almost 2,000 pubs
BrewDog's beers have been axed by almost 2,000 pubs across Britain in a major blow to the embattled brewer. The company's range of draught beers have disappeared entirely from approximately 1,860 pubs in the last two years – cutting its UK distribution by more than a third, according to confidential pub industry data. These figures also show that BrewDog's best-known beer, Punk IPA, has suffered the worst loss after being removed from 1,980 pubs over the same period – a 52.3pc decline in distribution. An industry source said BrewDog was 'losing taps in the [pub and bar trade] like you wouldn't believe' as pubs opt for rival beers such as Camden Town and Beavertown instead. Most of the pubs scrapping BrewDog beers are part of chains and owned by large pub companies, removing a key source of revenue for the brewer at the same time as it struggles to revive its fortunes. The collapse in BrewDog's UK distribution comes following a turbulent period that saw the one-time darling of the craft beer scene post massive losses and face allegations of a 'toxic' workplace culture. Last month, the company was forced to close 10 of its own branded bars across the UK including its flagship site in Aberdeen after deciding they were not 'commercially viable'. It highlights the pressure on James Taylor, BrewDog's chief executive, to reverse the company's declining fortunes. BrewDog has recorded losses of £59m in 2023 and £30.5m in 2022. Mr Taylor admitted in a recent interview with The Telegraph that the company would again be in the red this year. According to the industry insider, the pub retrenchment is likely to make BrewDog ever more reliant on JD Wetherspoon, whose 794 pubs now make up a significant chunk of its remaining distribution, 'If they ever lost the JD Wetherspoon deal, then that's Punk IPA done as a [pub trade] product,' they said. Lauren Caroll, BrewDog's chief operating officer, said: 'Independent brewers across the board have felt the squeeze from the economic pressures hitting the pub trade. With costs rising and consumers watching their spend, pub groups have been narrowing their ranges, and brewery-owned pubs are putting more emphasis on their own brands. 'It's not just us – every independent brewer has been affected. We saw the trend coming, which is why we've shifted focus to high-impact channels like festivals, stadiums, and independent [pubs].' Founded in 2007 by James Watt and Martin Dickie, BrewDog rose to prominence in the 2010s amid a boom in demand for independent beers and hoppy IPAs. Led by Mr Watt as chief executive, the company became known for marketing stunts such as driving a tank through London and brewing what it claimed was the world's strongest beer to be served from a taxidermy squirrel. However, in recent years it has been dogged by controversies including high-profile allegations of a 'culture of fear' that emerged in an open letter from former employees and people working there at the time. Mr Watt was also accused of acting inappropriately with female staff following a BBC investigation, which he stringently denied. He stepped down as chief executive in 2024, handing over control to James Arrow, then its chief operating officer. Mr Arrow left BrewDog after less than a year in post and was replaced by Mr Taylor, a former fashion industry executive, who has overseen a major rebrand of the company's beers and hopes to restore faith in the company. Further criticism has been heaped on the decision to sell a stake to the American private equity firm TSG Consumer Partners in 2017, which minted Mr Watt and Mr Dickie as millionaires. The unorthodox deal forced BrewDog to deliver an 18pc compounding return to TSG, which rapidly increases the interest on TSG's shares on an annual basis This is believed to threaten the shareholdings of thousands of 'Equity Punk' retail investors who plied their savings into the brewer as it grew. Asked about this last month, Mr Taylor said: 'I will try and create shareholder value for everybody and what happens in the future in terms of the value of that? Well, quite frankly, it's an academic conversation for the moment.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
41 minutes ago
- Yahoo
Losses balloon at Ovo tycoon's luxury private members club
A luxury private members' club owned by the millionaire founder of Ovo Energy has been hit by ballooning losses since reopening. Stephen Fitzpatrick's Kensington Roof Gardens plunged £26m into the red in the 12 months to December, according to new filings, up from losses of just £6.6m the year prior. The scale of the losses reflects the challenge facing Mr Fitzpatrick in making a success of the exclusive club, which he reopened in July last year. Owned by Sir Richard Branson until 2018, Kensington Roof Gardens has an illustrious history as a west London party venue and was once home to a flock of pink flamingos. To safeguard the company's balance sheet, Mr Fitzpatrick, a Belfast-born City trader, recently secured a £15m loan from a Tel Aviv-based investment fund that is subject to a punishing 17.5pc interest rate. This is expected to see the company through to May 2026. It has already sparked more than £3m in debt interest costs. Total revenues hit £4.3m in 2024, bolstered by charging customers an annual membership fee of £2,500 a year. This falls to £700 for under-32s. As well as securing a £15m loan, Mr Fitzpatrick also extended £29m to Kensington Roof Gardens through his own investment vehicle, Imagination Industries. Similar loans had previously sparked scrutiny because they were made when Imagination Industries was also the owner of Ovo, Britain's fourth biggest energy supplier. This led to Mr Fitzpatrick being hauled before MPs in 2022, as they urged him to 'open the books' after grilling him over £40m worth of intercompany loans. Ovo, which is currently said to be in merger talks with Scottish Power, has since cut ties with its former parent group. However, Mr Fitzpatrick is the ultimate owner of each of these businesses, which form part of his sprawling business empire. He was also formerly the largest shareholder in Bristol-based flying taxi business Vertical Aerospace but lost control late last year as part of an emergency refinancing deal. He also owned the Formula 1 Manor Racing Team before it collapsed in 2017. The roof gardens were built in 1938 and were bought by Sir Richard in 1981. During his tenure, the private club was a celebrity hotspot frequented by the likes of Freddie Mercury, Kate Moss and Madonna. Kensington Roof Gardens was contacted for comment. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
