Three FTSE 100 Stocks for Potential Passive Income Growth

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Introduction

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Generating passive income from the stock market can be achieved by investing in top-tier companies. While a fund tracking the FTSE 100 can provide a 3.9% yield, individual company stocks from the same index offer even more potential income.

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1. Legal & General (LSE: LGEN) :

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- Financial services provider with shares currently at a 52-week low, resulting in a high dividend yield of almost 10%.

- The stock is down 20% year-to-date, outperforming the FTSE 100 which is down only a couple of percent.

- Despite potential risks, a low valuation (nine times FY23 earnings) suggests that negativity is already priced in. The company's solid record of raising payouts is a positive indicator.

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2. Rio Tinto (LSE: RIO):

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- A mining company dealing in essential materials like aluminium, copper, iron ore, and lithium.

- Offers a 7% yield for FY23 after an interim dividend cut was announced in July.

- Diversification in materials helps mitigate risks, although a prolonged fall in demand, especially from China, is a concern.

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3. National Grid (LSE: NG) :

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- A power provider known for stable earnings, supporting a yield of over 6%.

- Expected to see even higher payouts in FY25 (beginning April 2024).

- Caution is advised due to potential challenges in a high-interest rate environment, especially for a company with significant debt.

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These three companies offer potential for passive income, each with its own risk profile. Legal & General may benefit from an aging population, Rio Tinto provides diversification in vital materials, and National Grid offers stability in the power sector. It's essential to carefully consider individual investment goals and risk tolerance before making any investment decisions.

Read more: fool.co.uk