Despite the recent market rally, FTSE 100 stocks could offer a relatively high passive income. Many shares in the index currently trade at prices that are lower than their long-term averages. Or are below their intrinsic values. As such, they have high yields in many cases that could make them attractive dividend shares.
Certainly, there are risks ahead for FTSE 100 shares. The index continues to trade below its previous highs as a result of a weak economic outlook and uncertainty caused by coronavirus. However, those risks may be factored into the dividend yields of these two large-cap shares.
A high passive income relative to other FTSE 100 shares
Few FTSE 100 shares have a larger passive income than life insurance business Aviva at the present time. It currently has a dividend yield of 6.6%, and recently updated the market on plans to raise dividends in the low to mid-single-digits on an annual basis. This could mean that it offers an above-inflation rise in shareholder payouts over the coming years.
Aviva is seeking to make changes to its business model to become more efficient. It also wants to specialise in areas where it has the greatest competitive advantage. This could mean short-term uncertainty . Meanwhile, the company also faces challenging operating conditions in many of its markets that may impact negatively on financial performance.
However, its plans may also lead to a better business with greater passive income potential over the long run. As such, from a risk/reward perspective, it may currently offer investment appeal.
An improving long-term outlook
Another FTSE 100 share that could offer a worthwhile passive income is aerospace and defence business BAE. Its dividend yield currently stands at 5.4%. It resumed dividends after a pause in 2020, with many of its operations performing relatively well over recent months.
Clearly, a weak economic outlook may have a negative impact on defence spending around the world. Governments may seek to reduce costs in order to balance their budgets after coronavirus.
However, BAE could offer a rising passive income as it seeks to strengthen its position in growth areas via acquisition. Its plans to expand into a wider range of regions may also prove to be an asset to the business that creates a more resilient financial performance in the coming years.
Building a diverse income stream
Clearly, more than two FTSE 100 stocks are needed to build a portfolio that offers a resilient passive income stream. As such, diversifying across a wide range of companies could be a shrewd move that creates a more robust income return in an uncertain period for the global economy.
With many shares offering relatively high yields, their income prospects could be attractive at the present time, despite the ongoing risks facing the world economy.